AIRLINE FINANCIAL ANALYSIS

 Running head: AIRLINE FINANCIAL ANALYSIS
Airline Financial Analysis
Student name
Institution
Author note
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AIRLINE FINANCIAL ANALYSIS
Introduction
JetBlue Airways Corporation (NASDAQ: JBLU) is an American low-cost airline. The
company is headquartered in the Forest Hills neighborhood of the New York City borough of
Queens. Its main base is John F. Kennedy International Airport, also in Queens. In 2001, JetBlue
began a focus city operation at Long Beach Airport in Long Beach, California, and another at
Boston's Logan International Airport, in 2004. It also has focus city operations at Fort
Lauderdale – Hollywood International Airport, Orlando International Airport and at Luis Muñoz
Marín International Airport in San Juan. The airline mainly serves destinations in the United
States, along with flights to the Caribbean, The Bahamas, Bermuda, Colombia, Costa Rica,
Dominican Republic, Jamaica, and Mexico. As of November 19, 2010, JetBlue serves 63
destinations in 22 states (including Puerto Rico), and eleven countries in the Caribbean and Latin
America (Barger, 2010).
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AIRLINE FINANCIAL ANALYSIS
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AIRLINE FINANCIAL ANALYSIS
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AIRLINE FINANCIAL ANALYSIS
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AIRLINE FINANCIAL ANALYSIS
(a) Calculate some financial ratios for the airlines for the last two years and include:
i. Liquidity ratios
Cash Flow Liquidity Ratio (2010) =cash Flow from operating activities+Cash+Market Securities
Total Current liabilities
=
????????????+????????????+????????????
????????????????
=1.55
Cash Flow Liquidity Ratio (2009) =cash Flow from operating activities+Cash+Market Securities
Total Current liabilities
=
896+486+457
1157
=1.59
Current ratio
Current Ratio (2010) = Total Current Assets
Total Current Liabilities
=
????????????????
????????????????
=1.3
Current Ratio (2009) = Total Current Assets
Total Current Liabilities
=
????????????????
????????????????
=1.3
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AIRLINE FINANCIAL ANALYSIS
Quick ratio
Quick Ratio (2010) = Cash & Equivalents+trade Receivables
Total current Liabilities
=
????????????+????????
????????????????
=0.5
Quick Ratio (2009) = Cash & Equivalents+trade Receivables
Total current Liabilities
=
????????????+????????
????????????????
=0.8
Profit margin
Profit Margin (2010) =???????????? ???????????????????????? (???????? ????????????????????????)
???????????????????? ????????????????????????????
=
????????
????????????????
=0.025
Profit Margin (2009) =???????????? ???????????????????????? (???????? ????????????????????????)
???????????????????? ????????????????????????????
=
????????
????????????????
=0.019
iii. Receivable collection period
Receivable collection period (2010) =???????????????????????????? ???????????????????????????????? ????????????????????????????????????????
???????????????????????? ????????????????????/????????????????????????????
=
????????
????????????????/????????????
=27
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AIRLINE FINANCIAL ANALYSIS
Receivable collection period (2009) =???????????????????????????? ???????????????????????????????? ????????????????????????????????????????
???????????????????????? ????????????????????/????????????????????????????
=
????????
????????????/????????????
=41
(b) Evaluate the risk profile of the airline, and examine the sources of risk.
Changes in trade and industry
The company has incurred loss through attempts to bargain work contracts, changing
flight schedules and sucking employees, as well as considering other efficiency and cost-cutting
measures. Since 2005, JetBlue airline industry has experienced significant consolidation and
liquidations. The worldwide trade and industry depression and the associated hostile conditions
like high redundancy rates, a controlled credit market, inadequate accommodation facilities and
rise in the cost of doing business can decrease spending for both leisure and business travel. The
hostile environment could also force an airline’s ability to raise fares to counteract increased
fuel, labor, and other costs (Barger, 2009).
Attacks from terrorist
In case of a terrorist assault, whether or not successful, there is the likelihood of the industry
experiencing increased security requirements and significantly reduced demand and harm to the
industry.
Competitive risks due to the longer-term nature of the fleet order book.
Through the company uses composites, next-generation engine technologies, and other
innovations, it is competitively disadvantaged because it has existing extensive fleet
commitments that would prohibit it from adopting new technologies on an expedited basis.
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AIRLINE FINANCIAL ANALYSIS
i. What information and data are most useful in answering this question?
The most useful information in answering this question are; security concerns,
competition and economic changes
ii. Calculate debt to total asset ratio
Debt to asset Ratio (2010) = ???????????????????? ????????????????????????????????????????????