Financial Comparison of Air France, Ryan Air and American Airlines
I decided to write the first experiential exercise about three airline companies. I chose Air France, what is the most famous airline company in Europe, a big US company American Airlines, and finally big low-cost airline in Europe, called Ryanair.
First of all, I would like to give a short introduction about all the three companies, what are their main advantages comparing to other airlines, because all of them are market leader in their own sector. After I make the calculation, and draw a conclusion, which company is performing better, which one is more attractive to investors.
Air France
Air France is a subsidiary of Air France-KLM Group. It operates worldwide scheduled passenger and cargo services to 185 destinations in 83 countries. On September 30, 2003, Air France and KLM Royal Dutch Airlines, has announced the merger of the two airlines, the new company to be known as Air France-KLM.
The main advantages of Air France- KLM are the followings:
• Passenger transportation - biggest European airline with 25.5% of market share and largest airline in the world in terms of operating revenue.
• Freight transport is the largest company for international freight transportation without integration.
• Airplane maintenance and repair is the largest multi-services operator
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(table from annual report Air France- KLM)
The net income for the year 2007 was €767 and the sales of the company were €24,114.
The Percentage of Sales = $767/24,114 = 0, 0318 ≈ 3,18 %
(All data in million Euros)
Return on Capital Employed = EBIT / (TA-CL) = 1149/ (30690- 9191) = 0,0534
Total Return to Shareholders = (∆ price of the share from the first day to the last + all dividends)/ price of the share
Total Return to Shareholders= {(33.07- 17.01)+0.96 }/33.07 = 0,53
Ryanair
Ryanair has grown from 3 million passengers to over 50 million passengers per annum. From an airline which operated just 19 routes in 1997, in year 2007 Ryanair operated over 550 routes from 22 base airports across the length and breadth of Europe. The employee numbers have quadrupled to over 4,500 today. Most importantly the average passenger fare has fallen from €57 in 1997 to just €44 today. (Ryanair)
Moreover the company provides a frequent point-to-point service which allows them to avoid costs of services for connecting passengers, costs of baggage transfer and costs of transit passenger assistance.
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The International Air Transport Association (IATA). 2014. Airline Cost Performance. IATA Economics Briefing. [report] IATA, p. 31.
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