FINANCIAL ANALYSIS

Air Transport Financial Analysis

Table of Contents

Introduction4

Ryanair Introduction4

Key Financials5

AirAsia Introduction5

Key Financials7

American Airline Introduction7

Key Financials9

Financial Strategies of Ryan Air9

Future Prospects11

Strengths12

Weaknesses12

Opportunities13

External Analysis14

Political14

Economic14

Social-cultural14

Technological15

Environmental15

Competitive Forces15

Financial Ratio Analysis17

a)operating and pre-tax results17

b)Return on capital/investment and shareholders' funds18

c)Solvency18

d)Liquidity19

e)Market capitalization and EPS21

Conclusion23

References25

Appendices27

Appendix A27

Appendix B27

Appendix C28

Appendix D29

Appendix E31

Appendix F32

Appendix G33

Appendix H34

Appendix I35

Appendix J36

Air Transport Financial Analysis

Introduction

This paper provides the financial analysis of three major airlines of different regions that are Ryanair, AirAsia and American Airlines. The paper compares the financial performance of the three companies by reviewing annual reports, financial statements, official websites and other financial journals and news articles. The financial results of Ryanair are analyzed for the last two years and compared with the other two companies. The paper also discusses the strengths and weakness of Ryanair and identifies the financial strategies that Ryanair follows.

Ryanair Introduction

Ryanair Holdings Co. operates a low-fares, scheduled passenger airline serving short-haul, point-to-point through its subsidiaries. It has a wide spread route network in Europe and Morocco from its bases at Dublin, London, Glasgow, Brussels, Frankfurt, Milan, Stockholm, Rome, Barcelona, Nottingham East Midlands, Liverpool, Shannon, Pisa, Cork, Marseille, Madrid, Bremen, Dusseldorf, Bristol, Alicante, Belfast, Bournemouth, Birmingham, Kerry, Edinburgh, Reus, Alghero, Cagliari, Trapani, Bologna and Pescara airports. Co. offers approximately 1,550 scheduled short-haul flights per day serving approximately 160 airports throughout Europe, with an operating fleet of 272 aircraft flying 1,300 routes (Ryanair, 2011).

Airline Ryan air first flight in 1985, representing a tiny airline - the "home" business family Ryan. Starting flights cheap fares between Irish cities and London, the airline after 5 years was close to bankruptcy after failing to make a profit or for one year of operation. The appointment in 1990 as director of airline talented innovator and speaker Michael O'Leary was a turning point in the history of the company. Southwest Airlines O'Leary and his colleagues have carefully studied and applied in practice, the business model of low cost transportation of the American Southwest Airlines. Ryan air has become the first "low fare / no frills” airline in Europe, giving rise to low-cost revolution in the continent. Following the principle of "not enough to be a 10% discount, you need to be cheaper by 90%" new team Ryan air had a radical restructuring of the airline drastically reduce its expenditures. Boeing-737-200 Replacing the fleet by one aircraft type, refusal of 14 unprofitable routes and focusing only on the 5 remaining, the internal company reorganization, a significant reduction and simplification of tariffs. One year later, Ryan air for the first time managed to make a profit (Ryanair, 2011).

Key Financials

(In EUR as of 2011)

Income Statement

Revenue

4,160m

Net Income

494m

Balance Sheet

Total Assets

8,422m

Total Liabilities

5,245m

Shareholders' Equity

3,177m

AirAsia Introduction

AirAsia provides air transportation services. The company has a fleet of 90 aircrafts, serves more than 132 routes covering over 65 destinations across Malaysia, Indonesia, Macau, Hong Kong, China, Thailand, India, Brunei, Singapore, Philippines, Cambodia, Laos, Myanmar and Vietnam. The company primarily operates in Malaysia.

The company provides its services through its portals such as AirAsiaGo.com, AirAsia Courier, and AirAsiaRedTix.com. AirAsiaGo.com, an online travel portal has selection of hotels, activities and travel services, ...