A MULTIPLE DISCRIMINANT ANALYSIS APPROACH TO GAUGING AIR CARRIER BANKRUPTCY PROPENSITIES: THE AIRSCORE MODEL

The anticipation of financial distress has become increasingly important in the deregulated world of air transportation. Generic (non-industry specific) bankruptcy forecasting models have existed for years, and financial theorists have designed many industry specific models for various sectors of the economy. No one, however, has yet modeled the airline industry. This article attempts that task. Using a sample of 76 carriers, key predictive variables are identified. The variables employed are important financial ratios that measure liquidity, leverage, efficiency, and profitability. Both a univariate and a multivariate model are generated using these variables. The derived model, AIRSCORE, achieves significant accuracy in separating those carriers in a distressed profile from those which are stronger financially.

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  • Accession Number: 00610192
  • Record Type: Publication
  • Report/Paper Numbers: HS-041 177
  • Files: TRIS
  • Created Date: Jun 30 1991 12:00AM