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Foundations of Airline Finance
Methodology and Practice
Bijan Vasigh, Embry-Riddle Aeronautical University, USA,
Ken Fleming, Aviation Consulting Group, USA and
Liam Mackay, Continental Airlines, USA
‘Professor Vasigh has produced that rare thing – a book on applied
finance that is readable and illuminating. Since the industry routinely
destroys shareholder value, despite creating tremendous consumer
value, this expertly guided tour behind airline financial statements
should be required reading for analysts, policy-makers and newcomers
to airline management.’
Brian Pearce, Chief Economist, IATA

Foundations of Airline Finance:
Methodology and Practice is a textbook
that comprehensively covers all aspects
of the subject, bringing together the
numerous and informative articles and
institutional developments that have
characterized the field of airline finance
in the previous two decades.
In the early chapters, the reader is
introduced to the elementary ideas
of the role of finance in the airline
industry. This is followed by an in-depth
presentation of the role of accounting
in airlines. The steps used in the
creation of financial statements are
presented to provide the reader with
a greater understanding of the impact
that managerial decisions and actions
may have on financial statements. Ratio
analysis is then used to further analyze
airline financial statements. Financial
indices such as return on investment
(ROI), profit margin, debt-equity ratio,
and price-earnings ratio are then
introduced; these are used not only
internally by airlines, but also externally
by the investment community. Airline
industry specific metrics, such as cost
per available seat mile (CASM) and
revenue per revenue passenger mile
(RRPM), are then covered. The concepts
of financial and operational leverage and
how they help airline decision-makers

determine the financial effect that
business uncertainties may cause. By
calculating the actual financial leverage
for specific airlines, the impact of
increases in price or decreases in costs
is then determined for individual airlines.
A major decision facing airline industry
is to either purchase or lease an aircraft.
Since in the airline industry the most
capital intensive asset is an aircraft,
we present a brief overview of the
aircraft purchasing and leasing markets.
The advantages and disadvantages of
either purchasing or leasing are then
discussed and shown to depend mainly
on the airline’s capital structure. This is
followed by a detailed buy versus lease
example that is used to help illustrate the
decision-making process.
The book also contains a full chapter
on managing risk. This introduces the
idea of fuel hedging and how it can help
reduce the risk. The concepts of future
and forward contracts and how they
affect hedging are then explained.
Foundations of Airline Finance:
Methodology and Practice will be
of greatest value to students of air
transportation but will also serve as an
accessible and comprehensive reference
for industry professionals.

www.ashgate.com/aviation

Foundations of Airline
Finance is scheduled for
publication in June 2010.
Order now and save 20%.
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June 2010
c. 350 pages
c. £25.00
c. $49.95

Paperback
978-0-7546-7770-3
c. £20.00
c. $39.96

June 2010
c. 350 pages
c. £65.00
c. 124.95

Hardback
978-0-7546-7769-7
c. £52.00
c. $99.96

NB. Prices quoted are approximate.
Discount offer ends 31st May 2010

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00 Paperback 978-0-7546-7081-0 $39. Vasigh are critical.. USA In one textbook it applies economic theory to all aspects of the aviation industry.95 . Purdue University. ‘We are fortunate to have this work added to the body of literature in our field.’ David Gillen.Foundations of Airline Finance Methodology and Practice ‘Vasigh has created a highly readable and accessible text which provides an understanding of the complexities of airline financial management.’ Daniel L. airline capital structure. Boeing Commercial Airplanes. In a time of global crisis. managers.’ Alessandro Oliveira. 2008 350 pages £25.00 2008 c. Airline Consultant ‘In order to survive in an ever-increasing competitive market.’ Richard Tame. Brazil ‘This textbook is a great companion to Introduction to Air Transport Economics and I recommend it to students. Embry-Riddle Aeronautical University. cost classifications. This book is a comprehensive guide for the finance-related issues that emerge in the airline industry. USA ‘This book is a fantastic introduction to the complexities of airline finance. airlines must manage their finances properly. He covers not only the essential techniques in financial analysis but also provides key material on aviation industry valuation. USA Contents: Preface Part 1 Theoretical Aspects of Airline Finance Role of finance in the airline industry Airline cost classifications Time value of money Risk and return Part 2 Airline Accounting and Finance Role of accounting in airlines Airline financial statements Financial statement analysis Part 3 Airline Capital Budgeting Airline capital budgeting Airline capital structure and cost of capital Working capital and current asset management Part 4 Practical Applications of Airline Finance Managing risks: airline fuel and currency hedging Buy versus lease decision-making Aviation industry valuation Appendices Glossary Index See also. It would be an invaluable guide for anyone just entering the management side of an airline. Aeronautics Institute of Technology. It offers many real-life examples and insights into the challenges facing today’s airlines. giving the reader a better avenue for understanding the metrics and methods that are particular to the industry. and more. Canada ‘Bijan Vasigh’s book offers the reader a good overview of the considerations and analyses that are important in evaluating the financial performance of the airline industry. allowing them to confidently discuss and understand the basics of airline finance. whether they be students or ex-line employees. The systematic approach adopted in writing it successfully navigates the readers through the complexities of airline financial statements.. Continental Airlines. Petree. USA ‘Dr Vasigh’s book is a valuable source of information for those who have a keen interest in understanding airline industry finance and accounting.’ Brent Bowen. bringing together the numerous and informative articles and institutional developments that have characterized the field of airline economics in the last two decades. Vasigh links traditional financial concepts with airline examples.95 Hardback 978-0-7546-7769-7 $124. 350 pages £65. researchers and students. the concepts thoroughly addressed by Dr.’ Fariba Alamdari. This excellent book should be essential reading for students of aviation as well as air transport industry professionals. It is of inestimable value for airline executives. scholars and practitioners who recognize that practicing cutting-edge financial management in the air transportation industry is essential. capital budgeting and importantly risk management.’ Zane Rowe. University of British Columbia. The area of airline finance needs this methodological approach to solve the decades-old problems the industry has not resolved.