My Eye-opening School Project on Airline Financials

WestIndian425

WestIndian425

Well-Known Member
Hey Guys,

I recently completed a short paper comparing the financials of two companies for my accounting class. (Side note: I like math, but I despise accounting...but I digress). Considering I am in aviation, I decided to pick two airlines, specifically two who have not gone through a merger or bankruptcy over the last decade: Allegiant and jetBlue. In the small paper, here's what I found:

  1. Allegiant is an older company, but jetBlue is practically double the fleet size! This rapid expansion made B6 a bonafide player in this competitive industry.
  2. Allegiant is MUCH more solvent than jetBlue.
  3. Allegiant is MUCH more liquid than jetBlue when it comes to Cash-Flow-to-Assets, while jetBlue trumps Allegiant in Cash-Flow-Yield.
  4. Allegiant's market strength is insane compared to jetBlue, not just in terms of stock price, but in earning per share.
  5. In terms of future growth, I can see why jetBlue is looking internationally more. Allegiant appears to have more room to grow within the lower 48.
With all that being said, you guys are spot on with the adage "friends don't let friends buy airline stock". Allegiant aside, with all the low, tight margins, and the volatility of commodities like fuel, management has to be really good to generate and secure profitability year over year while keeping the workforce happy. Over the last 5 years, jetBlue suffered a loss in 2008. Since then, they have been able to remain profitable.
I haven't really looked at it, but I can only imagine what the merged carriers, and those who went through bankruptcy recently, had to deal with in their financials.
 
Enjoyed reading your post.

So in terms of the "health of an airline" or business (which includes more stability and less volatility), Allegiant is a much more well grounded airline compared to JBLU, huh? I can see and believe it.

I would however would prefer to see a Spirt Airline v. Allegiant comparison though.
 
Scorpio11982 said:
I would however would prefer to see a Spirt Airline v. Allegiant comparison though.
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I actually wanted to do a Spirit vs. JetBlue comparison, but NK's financials didn't go back 5 years.
KSCessnaDriver said:
Just remember, Allegiant has more than just the airline going for it, it's a travel company. They sell travel packages
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This is true. However, B6 also has LiveTV as a business subsidiary, which is said to be doing well.
 
WestIndian425 said:
I actually wanted to do a Spirit vs. JetBlue comparison, but NK's financials didn't go back 5 years.
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Cool, I see. Again man, thanks for sharing. Hope you get an A or 100. Good luck to ya.

P.s. If you have other studies don't be afraid to share. Granted I won't be making stock trades off your valuation.

Unless your as gifted as that lady who literally invented Derivatives Swaps while in college... :Dthen I say SHOW ME THE MONEY-aaay!!!!
 
KSCessnaDriver said:
Just remember, Allegiant has more than just the airline going for it, it's a travel company. They sell travel packages
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This is important to note. I generally avoid domestic airline stock like the plague, but I'm taking a closer look at Allegiant lately because they aren't truly an airline. Allegiant is a travel package company that just so happens to operate some airplanes. It can't really be put into the same category as traditional airline stock.
 
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