Audit Industry Report - Airlines Essay Example | Topics and Well Written Essays - 1500 words

Audit Industry Report - Airlines - Essay Example As a comparison between two airlines, higher performance may just not be a measure of a better unit revenue as for many, the airliner may be facing a higher unit cost in contrast to others operating within the same industry. In parallel to all these factors, capital available for growth or horizontal and vertical integration of services is also a key factor to the industry’s long term success (Taneja, 1987). Many successful airliners may have to prefer long term gains and profits to measure their success and would plan to expand or integrate over a longer period of time. Specifically for the airline industry, growth may be accounted for in terms of the capacity for growth. Datamonitor.com (2007) reports that the United States airlines industry grew by more than 8 percent in 2006 which placed it at a combined value of more than $145 Billion. However, In order to grow, an airline and the industry itself would need more funding. The need for funding will be directly correlated to the performance of the company, as capital is generated form investors and for most equity investors, the airline may have to show growth in its equity over time. Moreover, apart the airline must also be a viable interest to the debt investors. For this to happen, and to conform with the debt investors, a more than reasonable ratio of debt-to-asset is required. Apart from the focus on these direct factors that influence investment, there are several other key factors that play a turning role in raising capital for the airline industry and more focus is placed on international expansion. To wage international expansion into the equity of an airline, a risk assessment factor has to be incorporated in the financial sheet of the airlines in such a way that it has to reflect more associated risks such as currency risks or political risks. These forms of risks are more appropriate