International Financial Accounting and Reporting—easyJet and Ryanair Analysis.docx

A critical comparison of easyJet and Ryanairas potential investment optionsSmall Group Project Module Name: International Financial Accounting and Reporting (ACC 7701)Lecturer and Coordinator: Ciaran ConnollySchool:Queen’s University Management SchoolQueen’s University BelfastAuthors: Denton, S., Jin, Y.,Suraganova, N., Zhang, T.Group Number: 7Developed between: 18th October 2013 – 20thNovember 2013ContentsContentsIList of abbreviationsII1Introduction12Description of the Environmental Context and Strategies12.1External Profile12.2Internal Profile33Overview of Financial Statements and Performances44Ratios55Evaluation of the Ratios and Post Publication Events66Conclusion9Appendix11References15List of abbreviationsAF-KLMAir France –KoninklijkeLuchtvaartMaatschappijEPSEarnings per ShareGBPGreat Britain PoundGBpGreat Britain PenceIAGInternational Airline GroupIFRSInternational Financial Reporting StandardsLCC Low Cost CarriersPPEProperty, Plant and EquipmentpptPercentagePointsROCEReturn on Capital EmployedROEReturn on EquityWCWorking CapitalIntroductionAfter discovering the demand for low cost carriers (LCC), the European market has grown into a place of strong competition but also a place for skimming lucrative profits. The aviation industry is aworthwhile but in times risky investment area, due to volatile factors. This analysis comparesRyanair (RYA) andeasyJet (EZJ),two leading European LCC. Our analysis attempts to determine who might pose the better investment option. Besides ratio analysis this evaluation, takes the companies’ external environment and the critical success factors into account, thereby enabling a broader understanding of the industry,before concluding with an investment recommendation.Description of the Environmental Context and StrategiesExternal ProfileDuring the last 10 years, LCC have grown significantly in Europe in comparison with flag carriers (CAPA, 2013a). Chart 1: (CAPA, 2013a)LCC faced many difficulties in the European market. Heavycountr