FINANCIAL METHODS AND INSTRUMENTS IN THE AIR TRANSPORTATION INDUSTRY

The primary purpose of this research is to provide an analysis of the financial instruments and methods currently utilized by the major U. S. air carriers. The first part deals with the current financial position of the air carriers and their projected capital requirements for the years 1969-73. Next, the internal sources of airline capital, depreciation and amortization, deferred taxes, the investment tax credit, and profits are discussed in detail. The significant impact of airline profits on internal as well as external sources of funds is described. Third, the external sources of the airlines' funds are analyzed. The structure of four debt-type instruments used by the air carriers, long term notes, subordinate debt, revolving bank credit, and equipment installment loans are presented, along with figures pertaining to their relative use by the air carriers. Next, the advantages of convertible debentures are considered, followed by a discussion of the increasingly popular investment tax credit lease. Finally, the relatively infrequent use of equity as a source of external funds is investigated.

  • Corporate Authors:

    Massachusetts Institute of Technology

    Department of Aeronautics and Astronautics, 77 Massachusetts Avenue
    Cambridge, MA  United States  02139
  • Authors:
    • Varga, G J
  • Publication Date: 1970-6

Subject/Index Terms

Filing Info

  • Accession Number: 00073558
  • Record Type: Publication
  • Source Agency: FLIGHT TRANSPORTATION LABORATORY, MIT DEPT. OF AERONAUTICS AND ASTRONAUTICS
  • Report/Paper Numbers: None
  • Files: TRIS
  • Created Date: Sep 5 1974 12:00AM