MoekoURAWA

EasyJet, Britain’s second largest low-cost airline proposed to increase shareholder dividends from 33% to 40%, as well as to buy additional 27 current generation A320 aircraft between 2015 and 2018 as their growth strategy. They aim to attract more investors into the business in the coming years. In the competitive European airline market, EasyJet maintains its competitive advantage with its low-cost model. EasyJet submits that the fleet expansion would help it keep costs low since the new A320s would be cheaper to run than its older A319s, enabling them to list lower price to sustain their position in the market. Additionally, the increase in dividend shines a spotlight to the business as larger competitor airlines (such as British Airways and Lufthansa) have not made consistent payouts in the recent years.

EasyJet is the Britain’s second largest airline by number of passengers carried to domestic and international destinations

 My thoughts…

It is interesting to see from the article that EasyJet has not only increased its share of dividend, but also invested in more planes during the unstable economic condition, especially in the airline sector. While its competitors’ focus is on the customers and uses capital towards the improvement of customer loyalty with member exclusive goods and services (to encourage repeating customers), EasyJet instead sees the value in serving their shareholders to create positive relationship and loyalty, leading to increase in future investments and attract potential shareholders. As the market leans more on on-the-budget travels, I truly believe that EasyJet was able to successfully identified their  Opportunity (shift in customer preference) and immediately optimize their Strength of low price to maximize its future revenue. [SWOT reference from TESLA example]. Nonetheless, focusing too much on the “low-cost” ideal could lead to unexpected problem. EasyJet, like the other airline companies have seasonal demands and are at constant price wars,  they ought to develop other areas of their offerings besides price to be more value driven and increase loyalty. Regardless, I am very interested to see how this increase of dividend to reflect on EasyJet’s position.

Work cited

Topham, Gwyn. “EasyJet Expands Fleet and Ups Dividend Payout.” The Guardian. Guardian News and Media Limited, 18 Sept. 2014. Web. 18 Sept. 2014. <http://www.theguardian.com/business/2014/sep/18/easyjet-expands-fleet-dividend-payout>.