2.13 faculty of Business and Law
ACFI3310 - Advanced Corporate Finance - Pxxxxxxx
Accounting and Finance BA (Hons)
ACFI3310 - Advanced Corporate Finance
Pxxxxxxx
2022 - 2023
ACFI3310 - Advanced Corporate Finance - Pxxxxxxx
MEMORANDUM
To: Analyst
From: Pxxxxxxx
Date: 16th February 2023
Subject: Evaluation of the bankruptcy risk for EasyJet Plc
As per your request, I have conducted a critical analysis of the bankruptcy risk for the
company using Beavers, Altman's, and Argenti's approaches.
1. Beaver (1966)
The first person to demonstrate how financial ratios could be used to forecast a company's
collapse was Beaver in 1966. In his analysis, failure was predicted using just one
single variable. From his investigation, Beaver selected the most reliable forecasting ratios to
evaluate the probability of a business failing. In order to evaluate the performance of EasyJet
plc to that of a rival, Ryanair Plc is used as a comparison in Appendix A. Over the past three
years, EasyJet Plc's liquidity ratio has considerably risen to 1.5558. In comparison to Ryanair
Plc, EasyJet Plc has a much higher liquidity ratio for the year 2021. As a result, EasyJet Plc
has a greater margin of safety when it comes to its capacity to pay back debts. However, it
can be seen that Ryanair Plc scores better when compared to some other ratios. This
illustrates how this approach may appear to be confusing, as the business classification is
based on one ratio at a time.
2. Altman (1968)
Altman expanded Beaver's statistical methodology in 1968, creating what is now known as the
multivariate discriminate analysis. By expanding the univariate analysis with more financial
measures, Altman made it more comprehensive. According to his model, a firm with a Z score
above 3 would be secure, while a firm with a Z score below 1.8 was potentially failing
(Kleinert, K. 2014, p11). As can be seen from Appendix B, EasyJet Plc has a z-score of 0.3526
for the year ending 2021, -0.0973 for the year ending 2020, and 1.4887 for the year ending
2019. Each of the z-scores is below 1.80, indicating a very high likelihood of financial
bankruptcy.
It could be argued that it is ideal to use the model as a quick assessment of economic health,
but if the results show an issue, it is wise to carry out a more thorough analysis.
ACFI3310 - Advanced Corporate Finance - Pxxxxxxx
3. Argenti (1976)
Argenti is broken down into three major classifications: defects, mistakes, and symptoms of
failure. This method offers a linear combination of ratios that differentiated groups of failing
and non-failing businesses most effectively. The score that the companies don't have to pass to
remain safe is 25. The total Argenti number in Appendix C is 32, which indicates a high
likelihood of bankruptcy and thus should raise some concern. I scored 25 out of 45 on the
overall number of mistakes in appendix C.2, which proves that the company's management is
ineffective.
In conclusion, I strongly recommend that the board of directors take the necessary measures to
mitigate EasyJet's bankruptcy risk. By focusing on key financial ratios and taking proactive
measures to improve their financial position, companies can reduce their risk of bankruptcy
and ensure long-term viability in a competitive market.
Thank you for your cooperation,
Pxxxxxxx
ACFI3310 - Advanced Corporate Finance - Pxxxxxxx
References (NOTE – This is not Harvard)
Armitage, J. (2020). EasyJet chief hires finance director from TUI to help Covid fightback. [online]
Evening Standard. Available at: https://www.standard.co.uk/business/easyjet-covid-lundgren-tui-
mytravel-thomas-cook-a4550301.html. [Accessed 20 February 2023]
Beyond Business Travel. (2018). Easyjet launching new loyalty scheme for business travellers. [online]
Available at: https://beyondbusinesstravel.com/easyjet-loyalty-scheme-business-travellers/.
[Accessed 23 Feb. 2023]
Biogr, J. and Lundgren (n.d.). Chief Executive Officer easyJet. [online] Available at:
https://www.airbus.com/sites/g/files/jlcbta136/files/2021-10/Biography-Johan-Lundgren.pdf.
[Accessed 21 February 2023]
BOARD AND AIRLINE MANAGEMENT BOARD PROFILES. (n.d.). Available at:
https://corporate.easyjet.com/~/media/Files/E/Easyjet/pdf/investors/content/governance-
section.pdf. [Accessed 20 February 2023]
Easyjet (2021). Innovation | Innovating the travel experience | easyJet. [online] www.easyjet.com.
Available at: https://www.easyjet.com/en/orange-spirit/innovation. [Accessed 22 February 2023]
EasyJet chief Johan Lundgren cuts pay to match predecessor. (2018). BBC News. [online] 29 Jan.
Available at: https://www.bbc.co.uk/news/business-42859853. [Accessed 23 February 2023]
EASYJET PLC STATEMENT OF RESPONSIBILITIES OF THE CHAIRMAN AND CHIEF EXECUTIVE 1.
CHAIRMAN. (n.d.). Available at: https://corporate.easyjet.com/~/media/Files/E/Easyjet/pdf/about-
easyjet/division-ceo-chairman-responsibility.pdf. [Accessed 19 February 2023]
easyJet plc. (2022). Results for the twelve months ending 30 September 2022. [online] 29 Nov.
Available at: https://corporate.easyjet.com/~/media/Files/E/Easyjet/pdf/investors/results-
centre/2022/2022-fy-results-release.pdf. [Accessed 21 February 2023]
EasyJet shakes up board after difficult summer. (2022). Financial Times. [online] 24 Aug. Available at:
https://www.ft.com/content/9b6bc92a-31c4-4056-914b-cb59849ad631.[Accessed 19 February
2023]
Fleming, M. (2018). Easyjet CEO: ‘We want to be the most data-driven airline in the world’. [online]
Marketing Week. Available at: https://www.marketingweek.com/easyjet-ceo-data-driven-airline/.
[Accessed 21 February 2023]
Georgiadis, P. (2022). EasyJet under fire as flight chaos exposes carrier’s operating model. Financial
Times. [online] 8 Jul. Available at: https://www.ft.com/content/ada5dfc3-0e6b-4657-a662-
2e6e72968e44. [Accessed 22 February 2023]
Kleinert, K. (2014). Comparison of accounting-based bankruptcy prediction models of Altman (1968),
Ohlson (1980), and Zmijewski (1984) to German and Belgian listed companies during 2008 – 2013
[online] 25 July. Available at:
https://essay.utwente.nl/65464/1/Kleinert_MA_Management%20and%20Governance.pdf.
[Accessed 23 February 2023]
Lally, K. (2023). easyJet update amid flight change to help people in Turkey. [online] Liverpool Echo.
Available at: https://www.liverpoolecho.co.uk/news/uk-world-news/easyjet-update-amid-flight-
change-26204401. [Accessed 22 February 2023]
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Legal Dive. (n.d.). Decentralizing budget management to improve legal ops. [online] Available at:
https://www.legaldive.com/news/legal-ops-easyjet-helen-lowe-logikcull-
budgeting/643082/.[Accessed 22 Feb. 2023]
Live news updates from January 25: US and Germany to send tanks to Ukraine, Apple supplier issue
profit warning. (2023). Financial Times. [online] 25 Jan. Available at:
https://www.ft.com/content/b0b36e8b-fa2a-4b16-a63f-3a982969545f. [Accessed 23 Feb. 2023]
login.bvdinfo.com. (n.d.). Fame. [online] Available at: https://fame-r1.bvdinfo.com/version-
20230117-3405-114/fame/1/Companies/Report. [Accessed 20 February 2023]
mediacentre.easyjet.com. (n.d.). Home. [online] Available at:
https://mediacentre.easyjet.com/story/15577/easyjet-invests-in-latest-aircraft-technology-to-
achieve-permanent-carbon-emission-reductions-across-its-entire-fleet. [Accessed 21 February 2023]
Sharpe, O. (2020). EasyJet cost-cutting measures may be misguided, says GlobalData. [online]
Aviation Business News. Available at: https://www.aviationbusinessnews.com/low-cost/easyjet-
cost-cutting-measures-may-be-misguided-says-globaldata/. [Accessed 21 February 2023]
the Guardian. (2022). EasyJet executive quits after weeks of turmoil and flight cancellations. [online]
Available at: https://www.theguardian.com/business/2022/jul/04/easyjet-executive-peter-bellew-
quits-turmoil-flight-cancellations-airline. [Accessed 20 February 2023]
Appendices
Appendix A: Beaver Model
A.1 - EasyJet Plc
EASYJET PLC Ratio Formula 30/09/2021 30/09/2020 30/09/2019
£000 £000 £000
Cash Flow Cash Flow -755 - 0.1058 -542 - 0.0824 1,098 0.2121 Total Debt 7,134 6,574 5,178
Net Income (PAT)
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 (𝑃𝐴𝑇) 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
−858 9,773 - 0.0878 -1,079 -0.1273 349 0.0428
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A.2 - Ryanair Plc
8,473 8,163 Capital Structure
𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 7,134 0.7300 6,574 0.7759 5,178 0.6343
9,773 8,473 8,163 Liquidity Current Assets 4,165 1.5558 2,563 0.6699 2,119 0.7942 Current Liabilities 2,677 3,826 2,668 Working Capital Working Capital 1,488 0.1523 -1,263 -0.1491 -549 -0.0673 Total Assets 9,773 8,473 8,163 Turnover Cash 3,549 1.7569 2,298 0.6951 1,285 0.2358
Operating Expenses - Depr. & Amortisation
2,500-456- 24
3,809-485- 18
5,948-484- 15
RYANAIR PLC Ratio Formula 31/03/2021 31/03/2020 31/03/2019
£000 £000 £000
Cash Flow Cash Flow -2,085 - 0.3187 1,176 0.1350 1,761 0.2558 Total Debt 6,543 8,715 6,888
Net Income (PAT)
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 (𝑃𝐴𝑇) 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
−864 10,673 - 0.0810 574 0.0428 758 0.0668
13,423 11,359 Capital Structure
𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 6,543 0.6130 8,715 0.6493 6,888 0.6064
10,673 13,423 11,359
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Note: Based on the appendices A.1 and A.2, EasyJet Plc appears to operate more profitably
due to its higher liquidity and positive working capital.
Appendix B: Altman Model
(Formula: Z = 1.2R1 + 1.4R2 + 3.3R3 + 0.6R4 + 1.0R5)
B.1 - EasyJet Plc
Liquidity Current Assets 2,957 0.9845 3,903 0.7996 3,261 0.9286 Current Liabilities 3,004 4,882 3,511 Working Capital Working Capital -46 -4.3576 -978 -0.0729 -250 -0.0221 Total Assets 10,673 13,423 11,359 Turnover Cash 2,683 1.6544 3,375 0.5753 1,466 0.2832
Operating Expenses - Depr. & Amortisation 2,108-486 6,530-663 5,727-549
EASYJET PLC
Ratio Formula 30/09/2021 30/09/2020 30/09/2019
£000 £000 £000
X1 Working Capital 1,488 0.1523 -1,263 -0.1491 -549 -0.0673 Total Assets 9,773 8,473 8,163
X2 𝑅𝑒𝑡𝑎𝑖𝑛𝑒𝑑 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 −858 9,773 -0.0878 -1,079 -0.1273 349 0.0428
8,473 8,163
X3 𝐸𝐵𝐼𝑇
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 -827 -0.0846 -782 -0.0923 490 0.0600
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B.2 - Ryanair Plc
9,773 8,473 8,163
X4 Market Value of
Equity* 6.63 x 758,010
7,134 0.7045 5.02 x 456,750
6,574 0.3488 11.50 x 397,208
5,178 0.8822
Book Value of Total
Liabilities
*closing balance x
shares outstanding X5 Sales 1,458 0.1492 3,009 0.3551 6,385 0.7822 Total Assets 9,773 8,473 8,163
EASYJET PLC
Ratio 30/09/2021 Weighting Z score 30/09/2020 Weighting Z score 30/09/2019 Weighting Z score
X1 0.1523 1.2 0.1828 -0.1491 1.2 -0.1789 -0.0673 1.2 -0.0808
X2 -0.0878 1.4 -0.1229 -0.1273 1.4 -0.1782 0.0428 1.4 0.0599
X3 -0.0846 3.3 -0.2792 -0.0923 3.3 -0.3046 0.06 3.3 0.198
X4 0.7045 0.6 0.4227 0.3488 0.6 0.2093 0.8822 0.6 0.5293
X5 0.1492 1.0 0.1492 0.3551 1.0 0.3551 0.7822 1.0 0.7822
Distress 0.3526 -0.0973 1.4887
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Note: According to appendices B.1 and B.2, both companies have Z-scores below 1.8, which
indicates a very high probability of bankruptcy.
RYANAIR PLC
Ratio Formula 31/03/2021 31/03/2020 31/03/2019
£000 £000 £000
X1 Working Capital -46 -4.3576 -978 -0.0729 -250 -0.0221 Total Assets 10,673 13,422 11,359
X2 𝑅𝑒𝑡𝑎𝑖𝑛𝑒𝑑 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 −864
10,673 -0.0810 574 0.0428 758 0.0668 13,422 11,359
X3 𝐸𝐵𝐼𝑇
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 -691 -0.0648 1,019 0.0760 866 0.0763 10,673 13,422 11,359
X4 Market Value of
Equity*
16.55 x 1,127,657
6,543 2.8521
9.21 x 1,091,561
8,715 1.1535
11.67 x 1,133,395
6,888 1.9200
Book Value of Total
Liabilities
*closing balance x
shares outstanding X5 Sales 1,393 0.1306 7,529 0.5610 6,598 0.5809 Total Assets 10,673 13,422 11,359
RYANAIR PLC
Ratio 31/03/2021 Weighting Z score 31/03/2020 Weighting Z score 31/03/2019 Weighting Z score
X1 -4.3576 1.2 -5.2291 -0.0729 1.2 -0.0875 -0.0221 1.2 -0.0265
X2 -0.081 1.4 -0.1134 0.0428 1.4 0.0599 0.0668 1.4 0.0935
X3 -0.0648 3.3 -0.2138 0.076 3.3 0.2508 0.0763 3.3 0.2518
X4 2.8521 0.6 1.7113 1.1535 0.6 0.6921 1.92 0.6 1.152
X5 0.1306 1.0 0.1306 0.561 1.0 0.561 0.5809 1.0 0.5809
Distress -3.7145 1.4763 2.0517
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Appendix C: Argenti Model
C.1 - EasyJet Plc (Defects)
Management Deficiencies
Item A Score
Available
A Score
Awarded
Support
Autocratic
chief
executive
8
0
On 1st of December 2017 Johan Lundgren became the Chief
Executive of EasyJet. Johan has worked in the travel industry
for more than 30 years (Biogr, J. and Lundgren, nd, online). On
25th of January 2023 Financial Times reported a rose of shares
by 10% after Johan Lundgren announced that the firm will
return to a profitable pre-pandemic flying levels by the end of
Summer (Financial Times, 2023, online).
By introducing a new loyalty programme, Johan has also
highlighted a series of initiatives that aim to attract more
business travellers. He also revealed plans to create a new
loyalty programme that will complement and support all of these
initiatives and foster even greater customer loyalty to EasyJet
(Beyond Business Travel, 2018, online).
The CEO has claimed to build the most data-driven airline in the
world, with data serving as the key to driving efficiency. Easy
Jet will be able to reduce expenses and boost revenue by
concentrating on core sectors including holidays, business
customers and loyalty. EasyJet has appointed its first chief data
officer, who will optimise flight schedules to determine when
passengers are most likely to travel and maximize the in-flight
experience (Fleming, M, 2018, online).
In 2018 the gender pay gap in EasyJet Plc was 51.7%. To
address the gender imbalance that underlies the overall gender
pay gap at EasyJet plc, Johan Lundgren has restated the
company's commitment to increasing the proportion of female
pilots with a target of 20% of new entrant pilots by 2020.
Furthermore, Johan cut his pay by £34,000 to match that of his
predecessor Carolyn McCall in order to demonstrate his
personal commitment to addressing the gender gap (BBC News,
2018, online).
Failure to
separate role
of chairman
and chief
executive
4
0
According to the Statement of Responsibilities of the Chairman
and Chief Executive, EasyJet Plc undoubtedly distinguishes the
roles of the Chairman and the Chief Executive. The Chairman's
main responsibility is to lead the Board and make sure it runs
smoothly. While, the Chief Executive's main responsibility is
the day-to-day management of the Company's businesses as well
as the creation and execution of strategy (EasyJet Plc, nd).
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Passive
board of
directors
2
0
During the year 2022 EasyJet announced a change of its board,
with three directors leaving as the airline’s management aims to
move on from the summer’s disruption, which was caught up in
the barrage of flight cancellations, delays and disruption in May
and June that marred the return of mass travel following two
years of border restrictions. According to the chair Stephen
Hester, the new appointees will strengthen the board by bringing
extensive airline and travel industry experience, with extra focus
on operations and logistics, customer experience, digital and
data (Financial Times, 2022, online).
Lack of
balance of
skills in
management
team –
financial,
legal,
Marketing,
etc
4
0
EasyJet Plc has an experienced and committed management
team of 9 members. Almost all members have a various
nationalities and important fields of expertise. For example,
Peter Bellew who is the Chief Operating Officer has key areas
of expertise in aviation and flight operation, while Ella Bennett,
the group people director has key areas of expertise in reward
and digital transformation. The company understands the
advantages of having a diverse executive leadership team to
encourage innovation and boost performance.
In the Corporate Governance Chairman Statement, it is
highlighted that every member of the management team is
extremely knowledgeable and experienced in a variety of sectors
and roles across the industry (EASYJET PLC, nd, online).
Weak
finance
director
2
0
Kenton Jarvis, one of the top executives at his previous
employer, TUI and Aviation, was appointed by EasyJet Chief
executive Johan Lundgren in February 2021 to be his new
finance director and help guide the faltering airline's comeback
from the devastating impact of the pandemic on the business.
According to EasyJet, Jarvis had demonstrated his capacity to
produce savings and effective turnaround programmes. This
knowledge will be essential as EasyJet moves into a phase of
recovery from the pandemic's most severe restrictions (
Armitage, J, 2020, online).
Lack of
‘management
in depth’
1
1
EasyJet Plc's management has poor organisational
characteristics. Peter Bellew, an EasyJet executive, left his
position in order to pursue other career options. When Stephen
Hester, the new chair of easyJet, began taking on more
responsibility in the wake of the crisis, senior executive level
changes have been on the horizon. Over the half-term holidays,
the airline cancelled hundreds of flights due to issues,
particularly at its major base at Gatwick. Due to Bellew's
departure, Johan Lundgren, the airline's CEO, will be under
more pressure to improve business conditions (the Guardian,
2022, online).
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Poor
response to
change
15
0
EasyJet Plc has reacted to numerous changes that have affected
them. Most recently, EasyJet Plc added a new service to let
travellers to assist individuals affected by the earthquake in
Turkey and Syria. The company will start an urgent onboard
collection to generate money for UNICEF's urgent earthquake
appeal for Turkey and Syria. EasyJet's whole network will host
in-flight collections, giving more than 2.7 million travellers in
36 countries the chance to donate.
Any funds received will be used to support UNICEF's 24-hour
emergency response in the area, which will aid in giving
children who have lost their homes, are sleeping on the streets,
or have been separated from their families (Lally, K. 2023,
online).
Accounting Deficiencies
No
budgetary
control
3
0
In 2021, EasyJet Plc confirmed that it would reduce its
workforce by up to 30%, i.e. approximately 4,500 jobs, as it
continues to struggle with the air travel restrictions put in place
as a consequence of the worldwide coronavirus pandemic
(Sharpe, 2020, online).
The spending of lawyers, compliance officers, and other
members of the in-house legal team is beyond the operations
chief's complete control. Helen Lowe, the director of legal
operations at EasyJet, proposed that rather than concentrating
that effort within the function, its better teach the lawyers and
other members of their in-house legal team how to manage their
own budgets. By teaching them fundamental accounting skills,
this can assist in preparing the staff to handle their own budgets
(Legal Dive, nd, online).
No cash flow
plans
3
0
The airline's targeted network allocation, significantly enhanced
revenue capabilities, and financial strength allowed EasyJet Plc
to achieve a record bounce back, leading in the strongest
headline EBITDAR for Q422 of £674 million, according to the
2022 Annual Reports and Financial Statements. All of this offers
the framework for generating significant shareholder returns.
The Board is also confident that the firm will enter the 2023
fiscal year with one of the best balance sheets in European
aviation and that it will seize growth opportunities as they arise
based on the group's cash flow forecasts and projections.
(easyJet plc, 2022, online).
No costing
system
3
0
EasyJet Plc has a strong costing system since it places an
emphasis on quick turnaround times for flights, high rates of
capacity, and seeks to reduce costs across the board, including
by using aircraft from low-cost carriers. For instance, 24% of its
customers support mobile boarding cards, and as the airline has
grown, EasyJet has been able to minimise airport inflation by
negotiating favourable landing and take-off rates (Economics,
nd).
Total defects score: 1/45
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C.2 - EasyJet Plc (Mistakes)
Item A Score
Available
A Score
Awarded
Support
High
gearing
15
10
30/09/2021 30/09/2020 30/09/2019
Gearing
Ratio
2.7033 3.4618 1.7347
Despite the fact that the gearing ratio has decreased between the
years 2020 and 2021, EasyJet Plc has an extremely high gearing
ratio of 2.7033 for the year ending 2021. As a result, the business
will frequently take out loans to cover operating expenses, putting
it at danger whenever interest rates rise or the economy contracts.
This could lead to financial problems, and even bankruptcy.
Overtrading
15
15
30/09/2021 30/09/2020 30/09/2019
Turnover 1.7569 0.6951 0.2358
Current
Assets
£4,165,000 £2,563,000 £2,119,000
Trade
Debtors
£44,000 £18,000 £79,000
Working
Capital
Ratio
0.1523 -0.1491 -0.0673
EasyJet's Plc current assets, working capital, turnover, and trade
receivables seem to have risen too rapidly throughout 2021
without having the financial resources to support such a quick
expansion, indicating that the company is overtrading.
Overtrading can result in bankruptcy if proper sources of funding
are not obtained.
The big
project
15
0
Presently, EasyJet Plc is working on an initiative to achieve net-
zero carbon emissions by 2050. By enabling the optimization of
aircraft descents, the company stated in 2022 that it would invest
several million pounds across its entire fleet in the newest aircraft
software, which will aid the airline in reducing carbon emissions
significantly and permanently in the near future.
All suitable aircraft will experience fuel and consequently carbon
emissions reductions as well as noise reductions with the fleet-
wide implementation of Descent Profile Optimisation and
Continuous Descent Approach.
Once the retrofit is finished, easyJet will be operating the world's
biggest fleet of aircraft equipped with Descent Profile
Optimisation and Continuous Descent Approach, resulting in an
estimated yearly decrease in carbon emissions of 88,600 MT,
ACFI3310 - Advanced Corporate Finance - Pxxxxxxx
which is equal to driving an ordinary car 16,173 times around the
earth (mediacentre.easyjet.com, nd, online).
Total mistakes score: 25/45
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C.3 - EasyJet Plc (Symptoms of Failure)
Item A Score
Available
A Score
Awarded
Support
Financial
Signs
4
3
Decrease in revenue: EasyJet's revenue significantly declined
from £3,009,000 to £1,458,000 between the years 2020 and
2021 due to the COVID-19 pandemic.
Increase in losses: EasyJet's net losses increased significantly in
2020 and 2021, primarily due to the decline in revenue and
increased costs. In 2020, EasyJet's net loss was £1,079,000
compared to a profit of £349,000 million in the previous year.
In 2021, the net loss was £858,000.
Decrease in shareholder value: EasyJet's share price declined
significantly in 2020 and 2021, reflecting the decline in revenue
and profitability. In 2020, the share price decline to 4.83 and in
2021 to 6.83, compared to 2019 that was 11.58.
Creative
accounting
4
0
International Accounting Standards are used in the financial
statement preparation process of EasyJet Plc.
The financial statements for the group and the business have
been prepared by the Directors in accordance with that
legislation and international accounting standards.
Non-
financial
signs
3
2
After two horrible years of border restrictions due to
the pandemic that had sent the industry into crisis, easyJet's
chief executive was looking forward to a new challenge as the
first indications of travel disruption started to appear in the
spring of 2022. Returning travellers have overwhelmed the
European aviation infrastructure after just three months, with
easyJet among the worst-affected carriers in a wave of
disruption brought on by a lack of personnel in every aspect of
the sector. In 2022, the airline has cancelled 1,760 flights from
the UK, five times more than it did during the same timeframe
in 2019 (Georgiadis, P, 2022, online).
However, rapid technological changes can impact the airline
industry, such as the emergence of new booking platforms,
mobile applications, and in-flight entertainment systems.
EasyJet has been able to successfully adjust to these changes
over the past five years by using digital to change the airline and
the travelling experience. For instance, the business equipped its
app with a mobile departure feature in 2013, enabling users to
check in in under ten seconds (Easyjet, 2021, online).
Terminal
signs
1
1
There are alarming signs for EasyJet Plc's approaching
bankruptcy, both financial and non-financial. Consequently,
there are terminal signs.
Total symptoms of failure score: 6/12
Total Argenti score: 32/102