Malmquist financial efficiency analysis for airlines

This article discusses the financial efficiency of 42 airlines from 25 countries, in 2001 (the year of the September 11 terrorist attack in the United States), and their profitability in the following year. The Malmquist index was used to indicate the airlines’ capital structure changes from 2001 to 2002. The results show airline capital structure management and profitability dynamics following the unexpected event of 2001. The main conclusion is that airlines which moved more intensively to reduce their indebtedness showed improved profitability, given their size, fleet and intangible assets.

► We analyze the financial efficiency of international airlines by comparing a year with external shock and one post shock year. ► We apply the Malmquist index to measure capital structure changes in the two years. ► The results show that the sustainability of airline companies is related to a conservative leverage.