In 1978, the United States government passed the Airline Deregulation Act, which removed governmental control over airline fares, routes, and entry of new commercial airlines in to the market. Since the airline deregulation act, more than 200 air carriers have filed for bankruptcy. This long list of airlines includes some of the largest names in commercial air travel, including US Airways, Delta Air Lines, and American Airlines.
What’s even more interesting is the debt to equity ratio that these major airline companies maintain. The debt/equity ratio is a calculation that divides a company’s total liabilities by the equity of shareholders. When the debt/equity ratio is high, the amount of debt that a particular airline possesses is also high. For this reason, investors are more inclined to invest in airline companies with a low debt/equity ratio.
As of May 2015, the average long-term debt to equity ratio of major airline companies stands at about 105, which is incredibly high when you consider that some airlines have a debt to equity ratio of 0. What this means is that for every $1 that a shareholder has invested, the average airline company has $105 in liabilities. However, some of the biggest names in air travel have debt to equity ratios that dwarf the 105 average. United Continental Holdings has a debt to equity ratio of 408.44, while American Airlines Group has a ratio of 684.59. With debt to equity ratios this high, it’s no wonder that these large airlines are filing for bankruptcy so frequently.
Not all airlines, however, are finding themselves stuck in the debt quicksand that Delta or American Airlines are experiencing. Alaskan Airlines, for instance, has a debt to equity ratio of just 0.50, and they have observed a 9.5% annual profit margin. Clearly, some airlines have got it figured out, while some are sinking deeper and deeper into debt.
Baltia Air Lines finds themselves in a unique position amongst the debt-ridden airline companies of today. With minimal liabilities and a huge potential for profits, Baltia Air Lines projects to be profitable within its first year of regular scheduled flights. That’s at 64% capacity with just one Wide-bodied B-747 aircraft. With numbers like these, it’s no wonder Baltia Air Lines has been dubbed as "America’s Newest Airline" by many.
Like Alaskan Airlines, Baltia Air Lines has a concrete plan in place to steer clear of the atrocious debts that the major airline companies like American Airlines and Delta Air Lines carry. While several of today’s airlines lease their aircraft from larger corporations, Baltia Air Lines owns their Wide-bodied B-747 aircraft and intends to expand its route network and fleet aggressively into the future. If all goes to plan, "America’s Newest Airline" will expand and thrive amongst other major airline competitors.
For more information and updates on Baltia Air Lines, please visit our Public Relations page and contact a representative in that department.
Posted 4 August 2015 by Admin
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