Gebremedhin, Gebrehiwot (Ato)Yared, Solomon2019-03-242023-11-042019-03-242023-11-042019-02http://etd.aau.edu.et/handle/123456789/17141A thesis submitted to the department of accounting and finance in partial fulfillment of the requirement for the degree of Master of Science in Accounting and Finance.Airline Industry is very dynamic, competitive, highly capital intensive and critical for sustainability. This study examines internal factors affecting the capital structure of five major airlines in Africa. It also explores the applicable capital structure theories used in determining capital structure using sixteen-year data from year 2002-2017.The study used quantitative method research approach by using secondary data from audited financial statements and other officially published documents. To deliver the most reliable factors fixed effect model was applied. The findings of the study show that profitability, liquidity, growth opportunity have statistically significant and negative relationship with leverage, firm size has a significant and positive relationship with leverage. Lease financing, Collateral value of asset and non-debt tax shield also have negative relationship with leverage but the result was insignificant. Finally, it is recommended African airlines to focus internal factors affecting the capital structure and to focus internal financing sources before demanding external financing sources, furthermore it recommended to use the most applicable peaking order theory as a guide line when determining the capital structure in order to maintain sustainability, add value and develop in the industry by avoiding in liquidity and bankruptcy problems.en-USCapital structureInternal factorsLeverageMajor airlinesThesis