Analyzing the relationship between profitability and traditional ratios : major airline companies sample

Abstract

The new conditions in airline industry due to the effects of liberalization have changed the market considerably since the 1980s. The difficulties in the industry force the airline companies to compete that financial analysis became indispensable to compare their profitability among the rivals worldwide. For this reason; it is aimed to reveal the relationship between profitability and traditional financial and airline-specific ratios for 17 leading major airlines for the 2011-2013 period in the study. Here; it is suggested to display the impact of traditional ratios on profitability rates for the companies. Operating Profit Margin (OPM), Net Profit Margin (NPM), Return on Assets (ROA) are selected as the profitability rates while Current Ratio (CR), Debt Ratio (DR), Total Assets Turnover Rate (TATR) and Revenue per Revenue Passenger Kilometers (RRPK) are chosen in the study as traditional financial and airlinespecific ratios. The methods as Descriptive Statistics, Correlation and Regression Analyses (the profitability rates as dependent variables and traditional financial and airline-specific ratios as independent variables) are studied respectively by running SPSS 20.0 Software Package to reveal the mentioned relationship between profitability rates and traditional ratios and to interpret the outcome for major airlines.