Determinants of Profitability For Asia’s Airline Companies
Airlines industry has been growing over the past two decades and it is becoming one of the leading industries globally. However, certain airline companies are still suffering from losses due to political and economical issues, changes in petrol cost and environment changes. Therefore, financial analysis is important for airline companies to react accordingly. The objective of this study is to investigate the financial performance of airline companies in Asia and the determinants of profitability between year 2005 to year 2011. The samples were selected from Asia through the combination of cluster and stratified sampling. Total of twenty-two companies were selected from several Asia countries such as China and Hong Kong, Cyprus, India, Indonesia, Japan, Malaysia, Oman, Pakistan, Russian Federation, Singapore, Taiwan and Thailand, Turkey and United Arab Emirates. The descriptive statistics and multiple regressions will be applied for this study. The dependent variable of this study is return on assets (ROA) ratio while the independent variables are the liquidity ratio, leverage, growth in revenues, company investment on assets and Gross Domestic Product (GDP) growth rate. As a conclusion, leverage, growth in revenues and current ratio is considered as determinants of profitability while company’s investments on assets and GDP growth is not a determinant of profitability.