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FINANCIAL STATEMENT ANALYSIS

AIRLINE INDUSTRY
JETBLUE vs SOUTHWEST

Sherine Mitto, Anuradha Srinivasan, Lydia McField, Andre Saldanha de Oliveira

GR 516 | Accounting For Executives | Winter 2016 | ICCI


Executive Summary
Horizontal Analysis
Vertical Analysis
Ratio Analysis
Conclusion

INTRODUCTION
JETBLUE SOUTHWEST

Official Name of the corporation JetBlue Airways Corporation Southwest Airlines Co.
Location of the corporate headquarters Long Island City Dallas, Texas
The state in which the company is
Delaware Texas
incorporated
Stock symbol of the corporation and the JBLU ; Nasdaq Stock
LUV ; Nasdaq Stock Exchange
exchange in which it is traded Exchange

EXECUTIVE SUMMARY
All values in 000s Jet Blue SouthWest
2012 2013 2014 2012 2013 2014

Revenue 4982000 5441000 5817000 17088000 17699000 18605000

Gross Profit 2431000 2431000 3042000 8438000 9392000 10928000

Net income 128000 168000 401000 421000 754000 1136000

Income from Continuing - - - - - -


operations

Net cash from operating activities 698000 758000 912000 2064000 2477000 2902000

Assets 7070000 7350000 7839000 18596000 19345000 20200000

HORIZONTAL ANALYSIS
HORIZONTAL ANALYSIS
16.15
ROE
18.36

5.86
ROI
5.4

0.96
TURNOVER
0.78

6.1
MARGIN
6.9

0 2 4 6 8 10 12 14 16 18 20
LUV JBLU

HORIZONTAL ANALYSIS
ROI Margin
7 8
6 7 6.9
5.86
5.4 6 6.1
5
5
4 3.97 4.26
4
3 3 3.087
2.26 2.33 2.56
2 1.81 2
2.46
1 1
0 0
2012 2013 2014 2012 2013 2014

Turnover ROE
1.2 20
18.36
1 0.9599 16.15
0.9189 0.9329 15
0.8 0.7546 0.7839
0.7046
0.6 10 10.52
6.02 8.35
0.4 6.78
5
0.2
0 0
2012 2013 2014 2012 2013 2014

HORIZONTAL ANALYSIS
VERTICAL ANALYSIS
6%
NET INCOME
7%

10%
INCOME TAX EXPENSE
11%

1%
INTEREST EXPENSE
2%

12%
OPERATING EXPENSES
9%

41%
COGS
48%

0% 10% 20% 30% 40% 50% 60%


LUV JBLUE

VERTICAL ANALYSIS
Product or Service Cost Control
Tax Burden
Debt Servicing
Operating Cost Control
Profitability

VERTICAL ANALYSIS
RATIO ANALYSIS
Current Ratio

0.7435
2014
0.6198

0.7851
2013
0.5635

0.909
2012
0.6841

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

RATIO ANALYSIS - LIQUIDITY


Accounts Receivable Turnover

44.72
2014
43.9

37.9
2013
42.18

0
2012
0

0 5 10 15 20 25 30 35 40 45 50

RATIO ANALYSIS ACTIVITY MEASURES


ROE

16.15
2014
18.36

10.52
2013
8.35

6.02
2012
6.78

0 2 4 6 8 10 12 14 16 18 20

RATIO ANALYSIS - PROFITABILITY


Debt Ratio

0.66
2014
0.68

0.62
2013
0.71

0.62
2012
0.73

0.56 0.58 0.6 0.62 0.64 0.66 0.68 0.7 0.72 0.74

RATIO ANALYSIS FINANCIAL STRENGTH


JetBlue SouthWest

Strengths Weaknesses Strengths Weaknesses

Strong customer High debt-to-equity Operational efficiency High dependency on


loyalty ratio passenger revenue

Fleet of new airplanes Only one stream of Market leadership Low load factor
revenue

High load factor Low on-time flight Capital structure Conservative growth
performance strategy

CONCLUSION
RECOMMENDATION

Investment

Credit-Worthiness

Employment

CONCLUSION
THANK YOU
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REFERENCE