AIRLINES AND RISK MANAGEMENT WITH FINANCIAL RATIOS: TURKISH AIRLINES CASE STUDY

Year 2017, Volume: 3 Issue: 1, 96 - 103, 30.06.2017

Burcu Sakiz

https://doi.org/10.17261/Pressacademia.2017.396

Abstract

Air transport which is the fastest mode of transport
can be accepted as the gift of the 20th century to the world. As our global
economy grows ever more linked, air transportation is the factor that brings
people together. The growing air transportation in all over the world and
espacially in Turkey has increased the importance of airline passenger and
cargo operations and has brought intense competition in recent years. Under
heavy competition, it is of utmost importance to have sustainable success of an
ever-evolving and growing market by accurately assessing the financial
performance and risks of businesses. Even though there are financial ratios
which are generally used for services, manufacturing and raw materials sectors
widely, there are a lot of metrics and indicators specific to the airline
industry used to assess the financial status of airlines. Traditional ratio
analysis is a frequently used for financial analysis and difeerent ratios are
used to match the type of analysis that needs to be done. However, it can be
benefical to group several indicators together into a statistical model. In
this paper, after literature review, one of the most important financial risk
evaluation models developed for airlines called Airscore model and also one of
the most popular and practical model that is Altman’s bankruptcy prediction
model (Z’’-score) are examined and its application with Turkish Airlines’
financial data is evaluated. 

 

Keywords

Financial ratios, financial analysis, airline sector, bankruptcy prediction models, Z’’ score

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