Ryanair: Its Vulnerability and Exposure to the Macroeconomic Environment

2129 words 9 pages
Ryanair: Its vulnerability and exposure to the macroeconomic environment

Business vulnerability is a measure of how susceptible an organization is to external events and the possible consequential impact on its business costs and profits. In this essay, I will assess the vulnerability of Ryanair and its degree of expose to macroeconomic shocks. I will also analyse Ryanair’s performance since 2000 in comparison to its rival BA, as well as their strategies in how effective they are in raising profits and minimizing their exposure.

Ryanair is a low cost Irish airline and one of the most profitable in the airline industry. However, it can be seen as vulnerable and exposed to macroeconomic shocks. To a degree this is due to Ireland’s
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In the journal article titled “Easyjet and Ryanair flying high on the Southwest model”, Chris Avery, an analyst at JP Morgan, believes that the answer to the threats from low cost airlines by BA has been perfect. They acknowledged that they were no longer the public’s favored provider and have taken measures to, not only, protect their primary market, but also to learn from their rivals. With BA’s key financial figures reported in British pounds and Ryanair’s in Euros in their respective annual reports, there is difficulty in comparing them. Nevertheless, I will look at other key statistics.

(Ryanair, 2008, p. 6)

Looking at the figures above, one can see that Ryanair charges passengers considerably lower, including no fuel surcharge. This is one for Ryanair’s USP and such low costs form a barrier for new entrants.

(Ryanair, 2008, p. 7)

With regards to consumer satisfaction, Ryanair’s service is greater than that provided by BA.

Source: Mintel

From above, one can see that Ryanair have the second largest number of active aircraft behind BA. Nevertheless, if the average age of the fleet is taken into account, Ryanair has one of the largest young fleet.

However, one can’t disregard the different sizes of the two firms. Since British Airways is a larger firm compared to Ryanair and offers different services, as well as owning a larger fleet of aircrafts, it may be more greatly exposed to the external environment.

To be able