Operating And Financial Performance Of Airline Companies

by Iznoreen Aida Zolkifly

Abstract

This study examines determinants of airline profitability from internal factors relevant to finance nd operations. Profitability is defined as the proportion of operating profit to operating revenue (OF’OR). Financial variables comprise leverage and liquidity levels while operational variables concern capacity utilization by passengers and cargo as well as utilization of fleet. In addition, this research statistically observes similarity between passengers and cargo capacity utilizations and for comparison purpose; OPOR is compared with a common dependent variable in other profitability studies, namely return on equity (ROE).

Findings from this research indicates current ratio, followed by fleet capacity utilization are most influential to OPOR while leverage ratio} capacity offered to passengers and cargo as well as passenger and cargo load factors move in adverse direction to OPOR. Research findings may be refined through expansion of sample size or number of variables in future. 

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