Air China tops airline Enterprise Value rankings; Delta second; no LCCs in top 10

Based on data from Bloomberg, EV incorporates equity plus debt funding, thereby capturing the full financial size of the company. Last week, CAPA reviewed the market capitalisations (ie the equity valuations) of the world’s listed airlines, which again was headed by Air China.

See related reports:

• Air China value greater than United-Continental, American, JetBlue, AirTran & US Air combined. Part 1
• Skyteam Alliance members more valuable than Star and oneworld. Airline Market Caps Part 2
• So you think you know your airline market capitalisation: Part 3

Who is the greatest of them all?

The combined EV of the world’s listed airlines is USD361 billion. They operate a combined fleet of some 10,170 aircraft. Utilising the worldwide airline fleet as a basis for extrapolation, the EV of the global airline industry is just over USD1 trillion.

Air China’s EV of USD31.8 billion is some 52% higher than second biggest Delta.

Singapore Airlines (SIA) ranks second on market cap, but 15th on EV. Its market cap exceeds its EV by some USD3.7 billion, reflecting the fact that SIA is sitting on a mountain of cash – with net cash of some SGD7.3 billion (USD5.7 billion) – and a small debt load of just SGD2.1 billion (USD1.6 billion).

China Eastern, previously the target of a strategic partnership from SIA, has strong rankings on both market cap and EV scores. China Southern also features prominently.

LAN has a slightly larger EV than Lufthansa, while Hainan Airlines ranks higher than the world’s biggest LCC, Southwest Airlines, on this score.

Indeed, Southwest is the only LCC in the Top 15 listed airlines by EV. Ryanair ranks 17th - well ahead of easyJet, which is the world’s 35th largest listed carrier by this measure.

IAG (BA-Iberia) is slightly bigger than Air France-KLM at USD15.7 billion and USD15.1 billion, respectively, while Korean Air is a larger entity than United Continental.

Cathay Pacific out-ranks Singapore Airlines, which in turn tops Qantas on the EV measure.

AirAsia’s EV is USD1.7 billion greater than rival Malaysia Airlines, while GOL edges out TAM.

Indian carrier Jet Airways has a significantly higher EV than market cap, given the large debt component.

Of course, size is not everything. It is what an airline does with its assets that counts – the profits it generates. It must also be remembered that airlines do use a lot of off-balance sheet financing that can influence ratios such as EVs.

But the rankings do reflect the considerable progress that Asia Pacific airlines, particularly mainland Chinese carriers, have made in recent years as they grow their operations.

Enterprise Values (EV) and market capitalisations of the world’s leading listed airlines: USD millions

Source: Bloomberg and Centre for Asia Pacific Aviation
*EVs and Market Caps as at 03-Mar-2011 and 09-Mar-2011, respectively