Markets Prices and Strategy
To prepare for the resit test 2, you should go through the cost calculation questions and answers in the seminars. I also provided an additional cost question with answers to help. Remember there is a big cost calculation question with a lot of marks in this test. You should also go through the news story for the case study again and try to work out answers to questions asked about demand, short run average costs, economies of scale and profit in competition as these are all questions in the test.
1…Markets Prices and Strategy Test 2 Case Study
Easyjet makes record profits despite higher fuel costs
http://www.bbc.co.uk/news/business-20406120
20 November 2012
Easyjet has made a record profit after a rise in passenger numbers who delayed their holidays to after the Olympics. The firm said pre-tax profits rose 28% to £317m for the year to 30 September, despite an extra £182m in fuel costs. The group said it made 7.5% more money per person per seat as it flew more passengers on more profitable routes, helped also by changes to its booking website. Easyjet shares rose 6% to close on Tuesday at 695p.
The airline, which is Europe’s fourth largest, carried 58 million passengers, a rise of 7%. Easyjet added that its first television advertising campaign had also helped to increase the number of passengers. Easyjet’s chief executive, Carolyn McCall, said: “Whilst there is always the potential for unexpected events to temporarily impact financial results the board of Easyjet is confident that its business model, strategy and people will consistently continue to generate superior returns and growth for shareholders.”
Easyjet is increasing the number of routes it flies, adding a Manchester to Moscow service next year, following on from its recently announced Gatwick to Moscow route. The company will also be launching new services to Prague in the Czech Republic and to Thessaloniki in Greece.
