Financial Statement

Analysis of the
Airline Industry

American Airlines
vs. Delta Air Lines
Anuradha Srinivasan
Sherine Mitto
GR-518 | Financial Management | Spring 2016 | ICCI
Agenda

Executive Summary

Horizontal Analysis

Vertical Analysis

Ratio Analysis

Conclusion
Executive Summary
American Delta

Official Name of the corporation American Airlines Delta Air Lines

Location of the corporate

headquarters Fort Worth, Texas Atlanta, Georgia

The state in which the company

is incorporated Delaware Delaware

Stock symbol of the corporation

and the exchange in which it is AAL DAL
traded
Horizontal Analysis
American Airlines
60,000,000

50,000,000

40,000,000

Revenue
30,000,000 Gross Profit
Net income
20,000,000 Net cash from operating activities
Assets

10,000,000

0
2015 2014 2013

-10,000,000
Horizontal Analysis
Delta Air Lines
60,000,000

50,000,000

40,000,000
Revenue
Gross Profit
30,000,000
Net income
Net cash from operating activities
20,000,000 Assets

10,000,000

0
2015 2014 2013
 Vertical Analysis
American Airlines Delta Air Lines
Section 1-i Percentage Percentage
Amount of Amount of
Revenue Revenue
Revenue 40,990,000 - 40,704,000
COGS 11,096,000 27% 17,096,000 42%
Operating
0% 0%
Expenses 34,786 32,902
Interest Expense 880,000 2% 481,000 1%
Income Tax
-7% 6%
Expense -2,994,000 2,631,000
Net Income 7,610,000 19% 4,526,000 11%
Vertical Analysis

Product or Service Cost Control

Operating Cost Control

Debt Servicing

Tax Burden

Profitability
Ratio Analysis
 Liquidity Ratios

LIQUIDITY MEASURES

Delta Air Lines

Acid Test Ratio

Current Ratio
American Airlines

0.0000 0.2000 0.4000 0.6000 0.8000

 Activity Ratios

ACTIVITY OR EFFICIENCY MEASURES

Number of Days Sales in

Inventory
Delta Air Lines
Number of Days in Sales
Accounts Receivables
Plant and Equipment
Turnover
Accounts Receivable
American Airlines Turnover
Total Asset Turnover

0 5 10 15 20 25 30
 Profitability Ratios

PROFITABILITY MEASURES

Dividend Payout Ratio

Delta Air Lines
Dividend Yield Ratio

Return On Equity (ROE)

American Airlines Return On Investment

(ROI-Dupont)
Return On Investment
(ROI)
0 0.250.50.75 1 1.251.51.75 2
 Financial Strength Ratios

SOLVENCY OR FINANCIAL STRENGTH

MEASURES

Delta Air Lines Times Interest Earned

Ratio
Debt Equity Ratio

American Airlines Debt Ratio

0 5 10 15 20
 Market Valuation Ratios
MARKET VALUE MEASURES

Delta Air Lines

Market-to-Book Ratio
Price-to-EBITDA Ratio
Price-to-Cash Flow Ratio
Price Earnings Ratio

American Airlines

0 5 10 15 20 25 30
 Conclusion
American Airline
Strengths
This company flies to over 350
destinations with a mighty fleet
size of 600 carriers.
Recognized as the best customer
loyalty program.
It has a strong presence in the key
business hub such as, Dallas,
Miami & Chicago.
Delta Air Line
Weaknesses Strengths Weaknesses
Acquisition of U.S. Airways Strategic acquisition of Northwest Pricing is well above the average
Airlines airline.
Union and labour issues on the Strong global presence and stable The company domestic services
company have hindered the well-known hub in Atlanta, are subject to competition from
success of the company. Georgia. both traditional and discount
carriers, some which may have
lower costs than Delta.
Low on-time flight performance This company has a fleet size of Business fliers sometimes question
over 700 caters to 334 plus Delta Air lines ability to meet their
destinations business requirements
Recommendation

Investment

Credit-Worthiness

Employment
Thank
you!
References/Credits
Presentation template by SlidesCarnival
Photographs by Unsplash
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