Comparative Financial Analysis



Comparative Financial Analysis

Introduction

Airlines are organizations that are engaged in transportation of passengers or cargo, and in some cases, animals and aircraft. In this paper, we will compare the financial statements of the four different airlines of different countries and provide them recommendation in order to improve their financial situation. These four airlines are Singapore Airlines, Emirates Airlines, British Airways and Ryan air and they are the well performing airlines in their respected countries.

Discussion

Comparative Analysis for Market Value

The sales of these four airlines have partially increased and decreased. However, the sales of British airways decreased at an annual rate of 2.1% over the five years to March 2010, which is a poorer performance than 4.1% yearly increase for the global industry as a whole (current prices). As compared to Singapore Airlines, Emirates Airlines and Ryan airlines grew their sales to approximately 6.0%, 5% and 3% respectively per annum over the last five years. This was faster than the global industry (current prices) (www.emirates.com). However, Ryan air was able to gain market shares.

Moreover, British Airways has underperformed the Global Passenger Airlines industry, it is likely to have lost market share since 2005. Nevertheless, Emirates Airlines managed a 4.2% operating profit margin in 2010, recovering from the 22.0% operating profit loss in 2008. (www.britishairways.com)

The strong growth of the Ryan air is also due to the depreciation of the US dollar as revenue figures have been exchanged from Euros to US dollars. (www.ryanair.com)

Looking at cost of fuel that has been increased, which impacted on Singapore Airlines, moreover as increase in the oil prices which directly impact on their financial health among them the British airways was much affected and hence resulted in the loss in 2010 (www.singaporeair.com).

Ratio Analysis

Profitability Ratios

Return on Asset (ROA)

We can see that British airways are indicating a negative trend which is due to the non management of the assets. British airways were not utilizing their asset efficiently that has impact on their financial health. As far as Ryan air and Singapore airlines are concern, their ROS is partially been increasing during the last five years. Emirate is efficiently utilizing their asset after a huge downfall from 2007 to 2008. Nevertheless, they managed to overcome their weakness.

Return on Equity

Return on equity deals with the profitability of the corporation which means how much a company generates profit with the money invested by the shareholder. The above trend of these four airlines shows that these companies had the most horrible downfall in 2009. However, except for British airlines, each airline improves their ROE trend. Emirates have improved a lot in 2010 whereas; Ryan air is still improving their ROE ratios, which indicate that Ryan air is efficiently investing the shareholder money in a profitable investment (Lagerquist, 2007).

Liquidity Ratio

Quick Ratio

This ratio express the company short-term liquidity. Looking at the above chart we can see that British airways ability to meet it short term obligation with it most liquid assets is decreasing from the last five ...