Should easyJet further penetrate the market for air travel between the UK and Greece? If yes, should the expansion plan be organic or via a takeover?

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Acknowledgments

I would like to acknowledge and thank:

  • Mr Giannis Dardoufas, easyJet Athens Station General Manager for his time and important data he offered during the interview.

Executive Summary

The management and main shareholders of easyJet plc. have recently expressed interest in growing their business considering the increased demand for private healthcare and more specifically diagnostic services in Greece. As the operational core of the business focuses on this market segment, the report analyses: “Should easyJet plc. further penetrate the Greek market? If yes, should the expansion plan be organic or via a takeover?”

The first part of the report deploys the research proposal which presents the research rational, the theoretical framework as well as the methodology followed. Following, an introductory note outlines details of the company as well as sketches the hypothesis of the research.

The analysis part is based on both primary and secondary research in the form of personal interviews with the top management (Figure 3), collection of financial reports, and independent sector analysis from the largest market research company in Greece. These data allowed for a detailed evaluation on a financial level (Investment Appraisal and Corporate Financial Analysis) and on a non-financial level (SWOT, PEST).

The conclusions part deploys an assessment of the two possible investment options for easyJet plc. On the one hand, there is a long term, heavy investment project of investing on a large competitor while on the other hand; there is the option of launching a new diagnostic centre anew.

Although the ‘new location’ project returns a positive NPV compared to the ‘Equity Purchasing’ which returns a lower NPV, it is important to consider the long term strategic plan of the company and the non-financial analysis. The discussion part suggests that the second option forms a more attractive investment opportunity of easyJet.

Research Proposal

Research Question

“Should easyJet further penetrate the market for air travel between the UK and Greece? If yes, should the expansion plan be organic or via a takeover?”

Rationale

An investment dilemma is explored whereby easyJet Ltd. UK’s largest low-cost carrier assesses two investment opportunities. On the one hand, the firm examines the possibility of launching a new route between London and Volos in mainland Greece. On the other hand, the firm estimates the possibility of purchasing a majority stake in a Greek competitor who operates charter flights from the UK to Chania airport in Crete. The aim is for easyJet to expand its network to leisure destinations around Greece.

Theoretical Framework

The analysis of this report is based on a twofold approach. Both financial and non-financial considerations will evaluate the potential feasibility of each investment project.

Key Areas of Syllabus

  • Growth and Evolution
  • Company Analysis
  • The external Environment
  • Investment Appraisal

Methodology

The procedure of the study was carried-out at primary and secondary level. Primary Research was conducted with the general manager of easyJet’s station in Athens International Airport (AIA). The company’s representative in Greece was interviewed in order to identify company’s future strategic and financial plan. The interview also contributed to the author’s knowledge and appreciation related to the industry’s structure in Greece, as well as its operating procedures, venture risks and the structure of the company.

Secondary Research was carried-out as well in order to collect data and information related to the industry, the market and the environment (internal and external) within the company is operating. The data were collected from various sources such as an industry report and insight on cost structure and market analysis in Greece for year 2009, company’s specific information on strategy and future expansion plans of easyJet plc. and several other resources libraries referring to the Greek legal framework and its characteristics related to the subject.

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Introduction

EasyJet plc. Was " first in February 1994 serving domestic routes in the UK. It has been a product of the deregulation in the airline industry and Sir S. Hadji-Ioannou’s entrepreneurial will. In 2010, sixteen years afterwards, the number of city pairs served by the airline have increased to 254 and competition has been continuously increasing by the emergence of a large number of competing low-cost carriers. Traditional airlines such as British Airways and Olympic Air have been fully adapted to the new ...

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