lcc accounting final (1)

LOW COST CARRIERFINANCIAL STATEMENTS

EASY JET – CARAMILE FLYBE - CHIEN

JET2.COM - HASSAN

AGENDA

1.Introduction

- Description of easyJet/Flybe/Jet2.com

2. Comparison of Balance sheets

3. Comparison of Income Statement

4. Comparison of Cash Flow

5. Comparison of Financial Ratio

6. Suggestion

7. Conclusion

1. INTRODUCTION

LOW COST CARRIER:

- EASYJET

- FLYBE

- JET2.COM

Europe’s second largest low-cost carrier

22-year-old British short-haul airline

Primary airports, routes and slots

“Making flying as affordable as a pair of jeans”

Flying to 735 routes to 136 airports, 31 counties

A fleet of 241 aircraft carrying 68m passengers in 2015

FLYBE• founded in 1979

• based in Exeter (UK)/ the largest independent regional

airline in Europe.

• Jersey European Airways British European Flybe

• 89 destinations in 15 countries (more UK domestic flights)

• main product - Cheap flights

• Other service – Booking.com/car rental

• 74 airplanes (booked 20 new airplanes)

• The Best Short-Haul Airline (2016 Business Travel Awards)

• The second safest LCC of the world (AirlineRatings.com)

FLYBE

• 2,262 employees

• Target group – Middle class/ Low income group

• main market - domestic market

(owns 25-28% of UK domestic market since 2011)

• averagely 7 million passengers a year

• Competition- Easy Jet, Ba Cityflyer, Jet2.com

JET2.COM History: around 30 years

The main products of this company is

Flight booking

Holiday trips

City breaks

Insurance services

Rental Car

Information about destination

58 destinations across Europe

Spain , Netherlands , U.K, Denmark, Germany and etc

expending their leisure travel business by more concentrating on airline market and tour operator

making money from Airline, Consultancy, Holiday packages , city breaks , beach holidays

2. COMPARISON OF BALANCE SHEETS

EASY JET

2- 1 COMPARISON OF ASSET/LIABILITIES/EQUITY

CA =26%

NCA = 74%

CL = 36 %

NCL = 17 %

E = 47 %

2015

CA =28%

NCA = 72%

CL = 32 %

NCL = 20 %

E = 48%

CA =33%

NCA = 67%

CL = 31 %

NCL = 23 %

E = 46 %

CA =31%

NCA = 69%

CL = 29 %

NCL = 29 %

E = 42 %

CA =39%

NCA = 61%

CL = 26 %

NCL = 36 %

E = 38 %

2014 2013

2012 2011

FLYBE

CA =55%

NCA = 45%

CL = 46 %

NCL = 29 %

E = 25 %

2015

CA =56%

NCA = 44%

CL = 39 %

NCL = 26 %

E = 35%

CA =39%

NCA = 61%

CL = 51 %

NCL = 37 %

E = 12 %

CA =41%

NCA = 59%

CL = 48 %

NCL = 30 %

E = 22 %

CA =52%

NCA = 48%

CL = 47 %

NCL = 27 %

E = 26 %

2014 2013

2012 2011

JET2.COM

CA =70%

NCA = 30%

CL = 79 %

E = 16 %NCL = 5 %

2015

CA =65%

NCA = 35%

CL = 74 %

E = 21%

CA =63%

NCA = 37%

CL = 68 %

E = 25 %

NCL = 7 %

CA =45%

NCA = 55%

CL = 61 %

E = 29 %

NCL = 10 %

CA =47%

NCA = 53%

CL = 57 %

NCL = 11 %

E = 31 %

2014 2013

2012 2011

NCL = 5 %

EASY JET FLYBE JET2.COM

2014

2015

CA =26%

NCA = 74%

CL = 36 %

NCL = 17 %

E = 47 %

CA =28%

NCA = 72%

CL = 32 %

NCL = 20 %

E = 48%

CA =56%

NCA = 44%

CL = 39 %

NCL = 26 %

E = 35%

CA =55%

NCA = 45%

CL = 46 %

NCL = 29 %

E = 25 %

CA =70%

NCA = 30%

CL = 79 %

E = 16 %NCL = 5 %

CA =65%

NCA = 35%

CL = 74 %

E = 21%

NCL = 5 %

2- 2 COMPARISON OF LIABILITIES/EQUITY

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Easy Jet Flybe Jet2.com

Equity

Liabilities

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Easy Jet Flybe Jet2.com

Equity

Liabilities

2015 2014

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Easy Jet Flybe Jet2.com

Equity

Liabilities

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Easy Jet Flybe Jet2.com

Equity

Liabilities

20122013

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Easy Jet Flybe Jet2.com

Equity

Liabilities

2011

LCC 2015 2014 2013 2012 2011

1. Revenue easyJet 4686 4527 4258 3854 3452FlyBe 574 621 614 615 596Jet2.com 1253 1120 869 683 542

1.1 Seat easyJet 99% 99% 98% 98% 98%FlyBe 94% 92% 92% 75% 75%Jet2.com 88% 88% 92% 87% 96%

1.1 Non-Seat easyJet 1% 1% 2% 2% 2%FlyBe 6% 8% 8% 25% 25%Jet2.com 12% 12% 8% 13% 4%

LCC 2015 2014 2013 2012 2011

2. Operating Expenses

easyJet 3998 3946 3761 3523 3183FlyBe 588 631 645 621 590Jet2.com 1219 1071 831 654 516

3. COMPARISON OF INCOME STATEMENT

(Millions £)

Fuel

29%

Airport and

ground

28%

Crew

13%Maintenance

6%

Selling and

marketing

3%

Aircraft

leasing

3%

Depreciation

3%

Others

15%

easyJet

Airport and

ground

30%

Fuel

18%Crew

15%

Aircraft

leasing

14%

Maintenance

6%

Selling and

marketing

5%

Depreciation

2% Others

10%

FlyBe

Fuel

19%

Crew

16%

Airport and

ground

11%

Depreciation

6%

Maintenance

5%

Aircraft

leasing

3%

Selling and

marketing

2%

Others

38%Jet2.com

OPERATING

EXPENSE

COMPARISON

2015

LCC 2015 2014 2013 2012 2011

3. OperatingProfit

easyJet 688 581 497 331 269FlyBe -14 -10 -30 -6 5Jet2.com 7 7 3.6 1.4 1.3

4. Profit Before tax

easyJet 686 581 478 317 248FlyBe -24 9 -41 -6 -4Jet2.com 40.2 42.1 40.5 28.1 26.2

5. Profit After tax

easyJet 548 450 398 255 225FlyBe -24 9 -42 -6 4Jet2.com 32.8 35.9 31.2 22.7 17.3

3. COMPARISON OF INCOME STATEMENT

(Millions £)

4. COMPARISON OF CASH FLOW

Easy Jet Flybe Jet2.com

Cash from 2015 2014 2013 2015 2014 2013 2015 2014 2013

operation

activities609 394 616 30 -6 -3 116 131 150

Investment

activities -532 -445 -416 -36 22 -33 -89 -106 -33

Financing

activities116 -526 197 6 138 16 -5 -1 -2

Cash in

change226 -589 368 0 155 -20 26 20 116

CF for

beginning

of the year

424 1013 645 178 23 43 211 191 75

CF for end

of the year650 424 1013 178 178 23 237 211 191

(Millions £)

Easy Jet Flybe Jet2.com

Cash from 2012 2011 2012 2011 2012 2011

operation

activities261 424 3 42 95 114

Investment

activities -389 -478 -58 -35 -116 -76

Financing

activities-309 246 10 59 -3 8

Cash in

change-455 188 -45 42 -23 46

CF for

beginning of

the year

1100 912 88 46 98 52

CF for end of

the year645 1100 43 88 75 98

(Millions £)

LIQUIDITY CURRENT

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2015 2014 2013 2012 2011

Jet2.com

Easyjet

Flybe

Average

4. COMPARISON OF RATIOS

LIQUIDITY QUICK

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2015 2014 2013 2012 2011

Jet2.com

Easyjet

Flybe

Average

AVG SALES PER PESSENGER

0

10

20

30

40

50

60

70

80

90

2015 2014 2013 2012 2011

Jet2.com

Easyjet

Flybe

Average

DEBT RATIO

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2015 2014 2013 2012 2011

Jet2.com

Easyjet

Flybe

Average

RETURN ON EQUITY

-1

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

2015 2014 2013 2012 2011Jet2.com

Easyjet

Flybe

Average

• Boost customer royalty program (74%

returning guests)

• Strengthen digital platform

• Maintain cost advantage

• Expand new bases such as Hamburg and

Amsterdam.

• Improve revenue from non-seat

6. SUGGESTION FOR

6. SUGGESTION FOR

• Maintain the current market share

• Explore new destinations

• More capacities to make profit

• try to add more revenue in other activities

(not only revenue from tickets)

6. SUGGESTION FOR

• Develop their existing partnership and new partnership as well

with other travel agencies

• Need to deliver charter flights to passenger for large range of

their customers

• Must offer logistics solution all over nation’s network of

distribution outlet.

• Must offer full picking , national distribution of products that is

controlled by products and storage facilities.

6. CONCLUSION FOR

EASYJET, FLYBE AND JET2.COM

• Three low cost carriers share different

financial statements.

- easyJet: strong balance sheet and income

statement.

- Flybe: leads domestic market, but with

financial risk (low equity).

- Jet2.com: expand product lines; however,

less profit