Risk and Investment Value Analysis in the U.S. Airline Sector of the Stock Market

Research Article
Open access

Risk and Investment Value Analysis in the U.S. Airline Sector of the Stock Market

Simeng Wang 1*
  • 1 Oklahoma State University    
  • *corresponding author simeng.wang@okstate.edu
Published on 10 November 2023 | https://doi.org/10.54254/2754-1169/39/20231975
AEMPS Vol.39
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-83558-099-8
ISBN (Online): 978-1-83558-100-1

Abstract

Amid the evolving global economic landscape, the U.S. airline industry has undergone significant transformations, thus raising the need for comprehensive analyses of its investment value and inherent risks. Financial health, risk management strategies, and investment potential of key players in the U.S. airline sector were assessed, namely, Southwest Airlines, American Airlines, and Singapore Airlines. The research methodology involves a thorough evaluation of the financial ratios of these airlines, their strategic initiatives such as hedging, as well as their environmental, social, and governance (ESG) risk ratings. Key metrics such as Return on Invested Capital (ROIC), the Piotroski F-Score, Altman Z-Score, and debt ratios among others form the foundation of the analysis, providing insights into their operational efficiency, financial strength, and risk profiles. The study concludes that each airline exhibits a distinct financial profile with varying levels of investment potential. The choice between investing in these airlines hinges on individual investor preferences, risk tolerance, and investment horizons. The results reveal that Southwest Airlines and Singapore Airlines present lower risk profiles, potentially appealing to conservative investors, while American Airlines could appeal to more aggressive investors due to its high potential returns, albeit at a higher risk. Meanwhile, Singapore Airlines offers a balanced profile attractive to growth-focused investors. The importance of aligning investment decisions with personal investment objectives and risk tolerance was underscored, thereby providing valuable insights for potential investors in the U.S. airline sector.

Keywords:

U.S. airline industry, financial health analysis, risk management strategies, investment potential

Wang,S. (2023). Risk and Investment Value Analysis in the U.S. Airline Sector of the Stock Market. Advances in Economics, Management and Political Sciences,39,233-240.
Export citation

References

[1]. Lu, Z., Zhu, L., Li, Z., Liang, X., & Zhang, Y. (2022). The effects of passenger risk perception during the COVID-19 pandemic on airline industry: Evidence from the United States stock market. Frontiers in Psychology, 12, 5966.

[2]. Claussen, J., Essling, C., & Peukert, C. (2018). Demand variation, strategic flexibility and market entry: Evidence from the US airline industry. Strategic Management Journal, 39(11), 2877-2898.

[3]. Park, A. H., & Seo, K. (2019). Common ownership and product market competition: Evidence from the us airline industry. Korean Journal of Financial Studies, 48(5), 617-640.

[4]. Alan, Y., & Lapré, M. A. (2018). Investigating operational predictors of future financial distress in the US airline industry. Production and Operations Management, 27(4), 734-755.

[5]. Zarb, B. J. (2018). LIQUIDITY, SOLVENCY, AND FINANCIAL HEALTH: DO THEY HAVE AN IMPACT ON US AIRLINE COMPANIES'PROFIT VOLATILITY?. International Journal of Business, Accounting, & Finance, 12(1).

[6]. Xu, Y., Park, Y. S., Park, J. D., & Cho, W. (2021). Evaluating the environmental efficiency of the US airline industry using a directional distance function DEA approach. Journal of Management Analytics, 8(1), 1-18.

[7]. Kiraci, K. (2019). Determinants of financial risk: An empirical application on low-cost carriers. Scientific Annals of Economics and Business, 66(3), 335-349.

[8]. Kang, W., de Gracia, F. P., & Ratti, R. A. (2021). Economic uncertainty, oil prices, hedging and US stock returns of the airline industry. The North American Journal of Economics and Finance, 57, 101388.

[9]. Merkert, R., & Swidan, H. (2019). Flying with (out) a safety net: Financial hedging in the airline industry. Transportation Research Part E: Logistics and Transportation Review, 127, 206-219.

[10]. Swidan, H., & Merkert, R. (2019). The relative effect of operational hedging on airline operating costs. Transport Policy, 80, 70-77.

Cite this article

Wang,S. (2023). Risk and Investment Value Analysis in the U.S. Airline Sector of the Stock Market. Advances in Economics, Management and Political Sciences,39,233-240.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

Disclaimer/Publisher's Note

The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of EWA Publishing and/or the editor(s). EWA Publishing and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.

About volume

Volume title: Proceedings of the 7th International Conference on Economic Management and Green Development

ISBN：978-1-83558-099-8(Print) / 978-1-83558-100-1(Online)
Editor：Canh Thien Dang
Conference website: https://www.icemgd.org/
Conference date: 6 August 2023
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.39
ISSN：2754-1169(Print) / 2754-1177(Online)

© 2024 by the author(s). Licensee EWA Publishing, Oxford, UK. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license. Authors who publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See Open access policy for details).

References

[1]. Lu, Z., Zhu, L., Li, Z., Liang, X., & Zhang, Y. (2022). The effects of passenger risk perception during the COVID-19 pandemic on airline industry: Evidence from the United States stock market. Frontiers in Psychology, 12, 5966.

[2]. Claussen, J., Essling, C., & Peukert, C. (2018). Demand variation, strategic flexibility and market entry: Evidence from the US airline industry. Strategic Management Journal, 39(11), 2877-2898.

[3]. Park, A. H., & Seo, K. (2019). Common ownership and product market competition: Evidence from the us airline industry. Korean Journal of Financial Studies, 48(5), 617-640.

[4]. Alan, Y., & Lapré, M. A. (2018). Investigating operational predictors of future financial distress in the US airline industry. Production and Operations Management, 27(4), 734-755.

[5]. Zarb, B. J. (2018). LIQUIDITY, SOLVENCY, AND FINANCIAL HEALTH: DO THEY HAVE AN IMPACT ON US AIRLINE COMPANIES'PROFIT VOLATILITY?. International Journal of Business, Accounting, & Finance, 12(1).

[6]. Xu, Y., Park, Y. S., Park, J. D., & Cho, W. (2021). Evaluating the environmental efficiency of the US airline industry using a directional distance function DEA approach. Journal of Management Analytics, 8(1), 1-18.

[7]. Kiraci, K. (2019). Determinants of financial risk: An empirical application on low-cost carriers. Scientific Annals of Economics and Business, 66(3), 335-349.

[8]. Kang, W., de Gracia, F. P., & Ratti, R. A. (2021). Economic uncertainty, oil prices, hedging and US stock returns of the airline industry. The North American Journal of Economics and Finance, 57, 101388.

[9]. Merkert, R., & Swidan, H. (2019). Flying with (out) a safety net: Financial hedging in the airline industry. Transportation Research Part E: Logistics and Transportation Review, 127, 206-219.

[10]. Swidan, H., & Merkert, R. (2019). The relative effect of operational hedging on airline operating costs. Transport Policy, 80, 70-77.

For authors
Guide for authors Policies for authors Aims and scope Subscription Open access policy
For editors
Policies for editors Editorial board
For reviewers
Policies for reviewers Privacy policy

Cookies are used by this site.
Copyright © 2024 EWA Publishing, its licensors, and contributors. All rights reserved, including text and data mining, AI training, and similar technologies.