- Bijan Vasigh, Embry-Riddle Aeronautical University, USA, Ken Fleming, Aviation Consulting Group, USA and Liam Mackay, Continental Airlines, USA
Foundations of Airline Finance: Methodology and Practice is a textbook that comprehensively covers, at a basic level, all aspects of the subject, bringing together many of 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 theoretical foundations that underpin the role of finance in the airline industry. Critical topics, such as the time value of money, the notion of risk and return, and the complex nature of costs (fixed, semi-fixed, variable, and marginal) are discussed and illustrated with concrete examples. This is followed by an in-depth presentation of the role of accounting in airlines. Ratio analysis is used to further analyze airline financial statements. Airline industry specific metrics, such as cost per available seat mile (CASM) and revenue per revenue passenger mile (RRPM), are covered.
The role of capital and asset management is then explained in the following chapters. The final chapters of the text present some important practical applications of the theoretical ideas presented earlier; these applications include hedging, the buy versus lease decision for aircraft and the question of the valuation of assets (mainly aircraft). Moreover, specific methods for actually calculating internal valuation are presented and evaluated.
Foundations of Airline Finance: Methodology and Practice will be of greatest value to students who are contemplating entering financial management in the air transportation industry; however, the text will also serve as an accessible and comprehensive reference for industry professionals.
Contents: Preface; Part I Theoretical Aspects of Airline Finance: The role of finance in the airline industry; Airline cost classifications; Time value of money; Risk and return. Part II Airline Accounting and Finance: The role of accounting in airlines; Airline financial statements; Financial statement analysis. Part III 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: Fuel hedging and risk management; Buy versus lease decision-making; Aviation industry valuation; Appendixes; Index.
About the Author: Dr. Bijan Vasigh is Professor of Economics and Finance in the College of Business at Embry-Riddle Aeronautical University, Daytona Beach, Florida and Managing Director of the Aviation Consulting Group, LLC. Dr. Vasigh is a member of the editorial board of the Journal of Air Transport Management and the Journal of Air Transportation World Wide. He worked on a NASA Research Grant for "Determination of Statewide Economic Benefits of the Small Aircraft Transportation System (SATS)." He is also a member of the Air Transport Research Society (ATRS) Global Airport Benchmarking Task Force.
Dr. Ken Fleming has extensive experience in aviation economics and operations research. He is a published and recognized expert in Aviation Economics as well as a multitude of other areas involving air traffic control and air traffic management.
Liam Mackay received his first degree from the University of Western Ontario and his MBA from Embry-Riddle Aeronautical University, both specializing in aviation management. He currently works for Continental Airlines on financial planning and analysis. A native of Vancouver, Canada, he currently resides in Houston, Texas.
Reviews: 'Vasigh has created a highly readable and accessible text which provides an understanding of the complexities of airline financial management. He covers not only the essential techniques in financial analysis but also provides key material on aviation industry valuation, capital budgeting and importantly risk management. This excellent book should be essential reading for students of aviation as well as air transport industry professionals.'
David Gillen, University of British Columbia, Canada
'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
'Dr Vasigh's book is a valuable source of information for those who have a keen interest in understanding airline industry finance and accounting. The systematic approach adopted in writing it successfully navigates the readers through the complexities of airline financial statements, airline capital structure, cost classifications, and more.'
Fariba Alamdari, Boeing Commercial Airplanes, USA
'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. It offers many real-life examples and insights into the challenges facing today's airlines. Vasigh links traditional financial concepts with airline examples, giving the reader a better avenue for understanding the metrics and methods that are particular to the industry. Foundations of Airline Finance offers good insight into how the airlines stay aloft financially despite consistently strong economic headwinds.'
Zane Rowe, Continental Airlines, USA
'As we have come to expect, this book represents the continuing high standard of scholarship that Dr. Vasigh is known to contribute. His latest work is absolutely necessary for students and practicing professionals alike. I commend Dr. Vasigh for the rigor of this text and its contribution to our academic discipline. We are fortunate to have this work added to the body of literature in our field. The area of airline finance needs this methodological approach to solve the decades-old problems the industry has not resolved. I am confident that airline managers of the future will be better prepared as a result of Dr. Vasigh's text.'
Brent Bowen, Purdue University, USA
'This book is a fantastic introduction to the complexities of airline finance. It would be an invaluable guide for anyone just entering the management side of an airline, whether they be students or ex-line employees, allowing them to confidently discuss and understand the basics of airline finance.'
Richard Tame, Airline Consultant
'In order to survive in an ever-increasing competitive market, airlines must manage their finances properly. This book is a comprehensive guide for the finance-related issues that emerge in the airline industry. In a time of global crisis, the concepts thoroughly addressed by Dr. Vasigh are critical. It is of inestimable value for airline executives, managers, researchers and students.'
Alessandro Oliveira, Aeronautics Institute of Technology, Brazil
'It is difficult to think of an industry so crucial to the promise of mankind's future or so fraught with difficulty as the air transportation industry. What was once a staid, stable and predictable industry has emerged into one of the most competitive, chaotic and unpredictable in the post-industrial age. In the midst of all of these challenges there is little doubt that the survivors will be those airlines who master the complexities of financial management. This textbook is a great companion to Introduction to Air Transport Economics and I recommend it to students, scholars and practitioners who recognize that practicing cutting-edge financial management in the air transportation industry is essential.'
Daniel L. Petree, Embry-Riddle Aeronautical University, USA
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