Factors Affecting Profitability in the Airlines Industry: an Empirical Study on Major Airlines in Sub-Saharan Africa
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Date
200-06
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Addis Ababa University
Abstract
This study examines the airline-specific, industry-specific and macro-economic factors affecting
airline profitability for the three airlines in Sub-Saharan Africa, covering the period of 2003-2013.
To this end, the study adopts a mixed methods research approach by combining financial reports and
further documentary analysis for qualitative information. The findings of the study show that load
factor and exchange rate fluctuation have statistically significant and positive relationship with
airlines’ profitability. On the other hand, variables like leverage and liquidity have a negative and
statistically significant relationship with airlines’ profitability. However, the relationship for airline
size, sales growth and major incidents/shocks is found to be statistically insignificant. The study
suggests that focusing and reengineering the airlines operations alongside the key internal drivers
could enhance the profitability. Moreover, airlines in sub-Saharan Africa should not only be
concerned about internal structures and policies, but they must also consider the macroeconomic
environment in developing business strategies to improve their financial performance or profits
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A case study of awash international bank S.CO