Comparative analysis on Delta Airlines, EasyJet and Icelandair based on financial reports 2006 – 2011. Common metrics size comparison with key ratios and growth indicators.
EasyJet: EasyJet is the most soundly operated airline of the three with one exception: credit strategy. There is an imbalance between receivables and payables that needs to be addressed as it affects net working capital adversely and may lead to financial difficulties quickly if market conditions change. Payables to receivables were 2.1x greater in 2007, 2.8x greater in 2008 but are 5.6x greater in 2011.
Delta Airlines: Delta is struggling with a negative equity position and net working capital -$4.972 million in the red. Intangible assets weigh far too heavily against total assets which makes the airline’s actual worth questionable. There is reason to believe that the airline will face difficulties given rising fuel prices and interest rate hikes if inflation levels begin to rise.
Icelandair: Icelandair has operated with negative network capital all years covered except 2010 when it liquidated long-term assets to 10x its cash account. EasyJet poses a greater threat than Delta, but Icelandair’s high-end customer targeting should be a sufficient defense barrier.