Discriminant, Logit, and Neural Network Models for Measuring Financial Fitness: Application to the US Airline Industry

This chapter discusses how the financial situation of the majority of the US airlines has become very precarious over the last several years. Bankruptcy, an unheard of event in the USA during most of the airline’s history, has become commonplace. Since 1982, over 50% of the members of the major carriers have failed, some more than once, and familiar names such as Braniff and Eastern have disappeared forever. While the events of September 11, 2001 have certainly been “the straw that broke the camel’s back,” this industry was financially unstable long before that sad date, as the data in this chapter will attest. This chapter provides a brief introduction into how Industry analysts could use tools in order to assist in forecasting stress in advance and in gauging the general financial fitness or health of this vital industry. The development and use of these tools is an important topic to many in the industry; creditors, stockholders, the flying public, and government regulators. Also, this chapter briefly examined the key variable in the US airlines’ plight. The use of significant amounts of long-term debt in this industry has been the direct cause of the high failure rate of the carriers.

Language

  • English

Media Info

  • Media Type: Print
  • Features: References; Tables;
  • Pagination: pp 547-560
  • Monograph Title: Handbook of Transport Strategy, Policy and Institutions
  • Serial:

Subject/Index Terms

Filing Info

  • Accession Number: 01002568
  • Record Type: Publication
  • ISBN: 0080441157
  • Files: TRIS
  • Created Date: Jul 27 2005 12:26PM