Financial Analysis of Delta Air Lines

Running head: ACCOUNTING
Accounting
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Table of Contents
a. Analysis overview of the company:.......................................................................................2
i. Summary of firm’s history:.....................................................................................................2
ii. Firms main competition and customers:................................................................................2
iii. Providing relevant information on management and management compensation:..............2
b. Depicting summary of the firm’s business strategy:..............................................................3
c. Financial analysis of the company:........................................................................................3
i. Analysis of the short term liquidity and longer term solvency:..............................................3
ii. Analysis of asset efficiency:..................................................................................................4
iii. Analysis of profitability:.......................................................................................................5
iv. Analysis of cash flow:...........................................................................................................6
d. Accounting analysis of the firm’s earnings quality:..............................................................6
e. An evaluation of firm’s stock price per share:.......................................................................7
f. Depicting relevant recommendations and conclusion:...........................................................9
Reference and Bibliography:....................................................................................................10

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a. Analysis overview of the company:
i. Summary of firm’s history:
Delta Air Lines is mainly identified to be one of the major American airlines, whose
overall net income amount to $4.373 billion in 2016. The company has a large history, where
it started the operations of crop dusting during 1925. Moreover, from 1928 the overall Delta
Air Lines mainly started its flight operations in 1928, where the first operations began in
1929 with the flights between Dallas, Texas and Jackson. The company during 1980 started
the pacific and internal flight operations (Ir.delta.com, 2017). However, during 2007 the
company faced bankruptcy but the merger with Northwest Airlines allowed Delta Airlines to
become world’s largest Airline. Lastly, the combining of website and reservation system
mainly retired the Northwest Airlines name and brand from Delta Air Lines.
ii. Firms main competition and customers:
The competitors of Delta Air Lines, are Southwest Airlines Co, American Airlines
Group Inc and United Continental Holdings Inc. The competitors of the organisation can be
identified from the Market Cap that is enjoyed by the companies. The overall competitors of
the company have mainly increased the intense competition in the market, which intensifies
the competition level in the airline industry. The main target customer of Delta Air Lines
ranges from first class facilities to basic economy, where high end customer and as well as
low income earning customers are targeted by the company (Ir.delta.com, 2017).
iii. Providing relevant information on management and management compensation:
The top management of Delta Air Line is Ed Bastian (Chief Executive Officer), Glen
Hauenstein (President), Gil West (S.E.V.P. and Chief Operating Officer), and Paul Jacobson

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(E.V.P. and Chief Financial Officer). These identified top management personnel mainly
conduct the relevant operations for improving profitability of the organization. The
management information mainly helps in identifying the relevant income, which could be
generated from the operations (Ir.delta.com, 2017).
b. Depicting summary of the firm’s business strategy:
From the overall evaluation of company’s performance, the relevant business strategy
of Delta Air Line could be identified. This could eventually allow the company to generate
the required level of profitability and attain sustainable growth. The main business strategy of
Delta Air Lines is to attract more customer for their Airbus, which helps in generating higher
revenue from investment (Ir.delta.com, 2017). In addition, merger is also one of the major
activities and strategy of Delta Air Lines, which has allowed the organisation to increase its
activities and become one of the largest Airlines in United States.
c. Financial analysis of the company:
i. Analysis of the short term liquidity and longer term solvency:
Particulars 2014 2015 2016
Solvency ratio 12.8% 36.4% 38.4%
Debt/Equity ratio 83.7% 79.6% 76.0%
Quick ratio 68.8% 47.7% 43.0%
The above table mainly represents the overall short term and long term solvency
condition of the Delta Air Lines from 2014 to 2016. The overall valuation of solvency ratio
mainly increased from 2014 to 2016, where the risk from investment relevantly increased.