Analysis of Effects of Financial Factors on Profitability of Low-Cost and Legacy Carriers

<p>Since airline deregulation in 1978, there have been over 180 bankruptcy filings by airlines. Legacy and Low-Cost carriers are unique in how they operate and how they generate revenue; both business models have advantages and disadvantages. However, the Low-Cost carriers have shown increases in revenue and have been growing at increasing rates over the Legacy carriers. This study analyzed financial factors from four airlines in each business model to reveal which financial factors can help determine profitability of an airline. This researcher found significant differences between Legacy and Low-Cost Passenger Revenues, Maintenance Expenses, and Depreciation and Amortization Expenses. Additionally, there were significant positive relationships between Low-Cost Cargo Revenue, Maintenance Expenses, and Depreciation and Amortization Expenses and their profit margin, showing that newer aircraft affect company success. Legacy Labor Expense had a significant negative relationship with profit margin, evidence that high wages and pensions reduce profitability.</p>

Name thesis:degree_name

Master of Science in Aeronautics

Level thesis:degree_level

Thesis - Open Access

Discipline thesis:degree_discipline

Applied Aviation Sciences

Year

2011

Author dc:creator

• Kleoppel, Nicholas Joseph

• financial factors
• profitability
• low-cost carriers
• legacy carriers
• airlines
• Aviation
• Management and Operations

Repository record dc:identifier

https://commons.erau.edu/edt/163

OAI identifier oai:identifier

oai:commons.erau.edu:edt-1162