FINANCIAL PERFORMANCE ANALYSIS OF AIRLINE COMPANIES EVIDENCES FROM SOUTHEAST ASIA AIRLINE INDUSTRY FOR THE PERIOD OF 2013 - 2017

• Main Author: Arif, Jumaidi
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/35590
• Institution: Institut Teknologi Bandung

Since 2004, the Low Cost Carriers (LCC) had tremendous growth in the Southeast Asia airline industry. Due to this condition, the Full Service Airline (FSA) market share had dropped to below 50 percent. Currently, most of FSA in SE Asia are stated-owned airlines and it becomes important due to the role as the front liner of government in tourism. Therefore, It is necessary to maintain the sustainability as the future development of the tourism industry depends on a gradual increase in air service. This research aims to analyze and measure the financial health conditions of four airline SOEs in Southeast Asia for period of 2013-2017. The decree No. KEP-100/MBU/2002 issued by Indonesia Ministry of State-Owned Enterprises (SOEs) in June 2002 provide the mandatory of measuring and rating of the SOEs financial health condition. there are eight ratios analyzed: 1) Return on Equity 2) Return on Investment 3) Cash Ratio 4) Current Ratio 5) Collection Period 6) Inventory Turnover 7) Total Equity to Total Asset and 8) Total Asset Turnover. Then the analyses will be validated by the decree of Ministry of SOEs to explains the financial health condition of each SOEs. In addition, return on invested capital (ROI) results from the four national airlines will be compared to the weighted average cost of capital (WACC) of each company to measure whether the four stated owned airlines are profitable or not profitable enough in SE Asia airline industry. The result shows that from 2013 – 2017, four airline SOEs has achieved financial health condition levels and rating as follows: Singapore Airlines Limited (BBB, BBB, BBB, BBB, BBB); Vietnam Airlines (BB, BB, BB, BBB, A); PT Garuda Indonesia (Persero) Tbk (BBB, BB, BBB, BB, B); and Thai Airways International (B, B, B, B, B). The return on invested capital (ROIC) of four stated-owned airlines were below the weighted average cost of capital (WACC) of each company. This research has added the knowledge in the financial literature. It also gives a strong insight about the condition of financial performance, therefore the company could make decisions to increase the market share and the profitability.