Determinants of Aviation Profitability: The Case of Ethiopian Airlines

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Addis Ababa University


In order to be competitive, profitability of a firm plays an undeniable role and investigation of the factors determining profitability of a firm would provide useful insights. Therefore, the main purpose of the study is to show factors that determine Ethiopian Airlines profitability. The dependent variable profit was regressed against growth, liquidity, leverage, tangibility of asset, lease and fuel cost, to show which factor determine Ethiopian profitability. The study used explanatory research design and multiple regression model is used to show the impact of the independent variables on the dependent variable. The study used quantitative and qualitative data, obtained from secondary source from 1981-2015.The data was analyzed using time series econometrics methodology. The analysis is done by using E-view 8. The result revealed that fuel cost, liquidity and leverages are statically significant to explain the dependent variable. Besides, tangibility of asset, lease cost and leverage ratios have negatively correlated with Ethiopian airlines profitability. Finally, it is recommended that the airline should have more concern to liquidity, fuel and leverage than growth and tangibility of asset. Keywords: Ethiopian airlines, Profitability, internal factors, financial statement. Determinants of Ethiopian Airlines profitability



Ethiopian airlines; Profitability; internal factors; financial statement.