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Comparative analysis of: Ryanair and British Airways Ryanair and British Airways dr Agata Kocia.

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Presentation on theme: "Comparative analysis of: Ryanair and British Airways Ryanair and British Airways dr Agata Kocia."— Presentation transcript:

1 Comparative analysis of: Ryanair and British Airways Ryanair and British Airways dr Agata Kocia

2 Ryanair established: 1985 flies to more than 150 cities in Europe with more than 230 aircrafts headquarters: London Stansted employs more than people short-haul carrier aim 1: improve punctuality aim 2: focus on cost cutting reduce the number of complaints (due to for example, lost luggage) online booking one model-type aircraft

3 British Airways established: 1974 flies to over 300 destinations worldwide with more than 238 aircrafts headquartered in Heathrow, London long-haul distance carrier possible impact on financial reports: a merger with Iberia brand aim 1: maintain positive brand perception aim 2: Create new channels of income

4 Air carrier sector: Risks brand reputation competitor prices fuel prices government regulation security issues long-term disruptions exchange rate fluctuations

5 Macroeconomic and financial analysis

6 Macroeconomic analysisIRELAND UNITED KINGDOM Gross domestic product (GDP) (%) 4,94,4-3,42,83,10,7 Inflation (%) 3,94,94,13,02,33,6 Unemployment (%) 4,64,66,12,95,35,6 Trade deficit Stock exchange index value 9,408 ISEQ®6,950 2,361 6,621 FTSE 1006,053 4,417

7 Financial statement overview (1) British Airways Income from operations £602 mln £875 mln (£220) mln Revenues8,4928,7538,992 Fuel costs 1,9312,0552,969 Airplane maintenance costs Total short-term assets 3,4313,1482,346 Cash and cash equivalents Cash flows from operations

8 RyanAir Net income 435,600 mln 390,708 mln (169,173) mln Income from operations 2,236,8952,713,8222,941,965 Fuel costs 1,257,062791,327693,331 Airport costs 273,613396,326443,387 Total long-term debt 2,033,7422,268,2072,583,610 Cash and cash equivalents 1,346,4191,470,8491,583,194 Net flows from operations 900,836703,902413,134 Financial statement overview (2)

9 Ratio analysis

10 Ratios (1)

11 Ratios (2)

12 Ratios (3)

13 Currency risk

14 Currency risk comes from … receivables from the sale of air tickets liabilities related to the purchase of fuel foreign debt purchase of / merger with other companies

15 Currency risk: Receivables from the sale of tickets value of a ticket denominated in pounds can be reduced (increased) if the pound is losing (increasing in) value foreign demand for domestic and international flights is inversely proportional to the value of national currency domestic demand for international flights is inversely proportional to the value of national currency

16 Strategies to protect against currency risk natural hedging only works if the currencies move in the opposite direction foreign exchange reserves and matching strategies foreign exchange hedging derivatives diversification policy

17 Currency risk graph (1)

18 Currency risk graph (2)

19 Currency risk graph (3)

20 Currency risk graph (4)

21 Thank you for your attention!


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