Financial Performance of Air Asia

In: Business and Management

Submitted By tvrama
Words 2846
Pages 12
CONTENTS

Page No

1. Introduction 2
2. Company Background 3
3. Asset Management and Leverage 5
4. Classification of Ratios 6
5. Ratio Analysis of the Performance of Air Asia and Malaysian Airlines System for the year 2011 7
6. Conclusion 11
Bibliography/Reference 13

QUESTION: Select any two listed companies of Bursa Malaysia from the Trading/Services sector and evaluate the companies’ asset management and leverage ratios using their financial statements for the year 2011

ANSWER

1. INTRODUCTION

Malaysian Airlines System (MAS) and Air Asia are currently the two main airlines operating in Malaysia. These two companies are competing in the airline industry which is fiercely competitive. This is a very large and continuously growing industry giving the industry players the opportunity for immense financial gains.

The different categories in the airline industry usually comprise of: International Category which has airplanes with adequate seating capacity that makes it possible for passengers to travel to any destination in the world. The earnings in this category gross over a billion dollars. National Category which has a lesser seating capacity and the gross revenues are less than one billion dollars. Regional Category with planes that operate short-haul flights. Cargo Category which has planes transporting goods.

The airline industry is characterized by its large capital requirements, high fares and operating costs, high tax and excise charges, and high landing, ground handling and air traffic control. Also fuel is a major component for the airlines industry. In 2011, fuel prices rose from USD 99 per barrel to USD 134 per barrel. As such, the airline industry as a whole has flown through turbulent times due to this escalation in fuel prices. Therefore,…...

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