Financial Management

This section presents the annotated bibliography for the sources that will be used to carry out the financial analysis for Delta Airlines.

Annotated bibliography

Broderick, S. (January 01, 2018). Fleet simplified, Aeromexico eyes Delta joint-venture opportunities. Aviation Week & Space Technology, 26.

Broderick (2018) states that Delta Airlines (DAL) has consistently set the pace in profitability among its major competitors American Airlines and United Continental. Delta airlines amassed a staggering pre-tax profit of $1.9 billion on revenue amounting $19.5 billion in the first half of 2014 translating to a 9.7% pre-tax margin. Although DAL’s closest competitor American Airlines also recorded $1.9 billion pre-tax profit over a similar duration, the company had invested a whole $21.4 billion representing a lower profit margin at 8.7%. The third competitor UCL trailed at $0.43 billion with at 2.3% margin. Moreover, DAL still maintains a significant lead in cash flow well above its competitors. This article will be essential in the support of DAL as a profitable venture.

Bhaskar, R. (January 01, 2014). Data Analysis for Dynamic Pricing in Airline: The Role of Tactical Pricing. Journal of Cases on Information Technology (jcit), 16, 1, 14-22.

Bhaskar (2014) in the article argues that DAL stocks have quadrupled in the recent years raising the expectations of the investors in seeing a similar performance over the next two years. However, while Delta’s stock isn’t undervalued as it was in 2012, it still seems quite cheap in light of the company’s recent earnings growth and adequate cash flow. Bhaskar  adds that with long term investment, the investors can sit tight and enjoy benefits of DAL’s strong cash flow. The strength in cash flow would enable DAL to pay down the bulk of its debt, fund most of its pension liabilities and also maintain 1% dividend yield in the next few years. By so doing, DAL will be in a position to devote more cash to shareholder-friendly uses. Long-term DAL’s shareholders thus have a lot to look forward to in the next five to ten years. This article will be used to convince the client that investing in DAL 

Byrd, J., Hickman, K., & McPherson, M. (2013). Managerial Finance [Electronic version]. Retrieved from https://content.ashford.edu/  

The book by Byrd et al. (2013) provides a detailed analysis of financial ratios. Byrd et al. (2013)  adds that today’s investors want to know the truth about a company. Is it facing any litigation? Is its revenue increasing? Does it have any difficulties? What is its EPS and Price/ Earnings ratio? Investors would also want to know how Delta Airlines manages its expectations. This book will therefore be used to make informed decisions based on the values of financial ratios of Delta Airlines.

Reynolds-Feighan, A. (November 01, 2018). US feeder airlines: Industry structure, networks and performance. Transportation Research Part A, 117, 142-157. 

According to Reynolds-Feighan  (2018), strong fundamentals will actually favor the company’s investment portfolios, as they are likely to generate more profits. Delta Airlines is a blue chip company since it is one of the best-traded companies in the New York Stock Exchange. It is also the second largest airline, which implies that every year the company is likely to get increased revenue from its operations favoring investors of the Airlines. According to World Airline News, Delta Airlines is likely to expand its territories in 2016, as it will launch seasonal services to Iceland’s Keflavik International Airport from its Twin Cities hub. The articles will also be used to make informed decisions about DAL based on the values of financial ratios.

Wahlen, J. M., Baginski, S. P., & Bradshaw, M. T. (2018). Financial reporting, financial statement analysis, and valuation: A strategic perspective.

Wahlen et al. (2018) state that the term moderate aggressive investing refers to an investment style where an investor chooses investments with high risks. These high-risk investments are like the stock exchange and the penny stock market where the shares or stocks are volatile and gain value over a short-term basis but are likely to lose value rapidly. The investment type chosen by moderate aggressive investors are those that gain high profits over a short period and are subject to greater losses within that period. The article will therefore guide in the decision making process on whether to invest on DAL based on its financials. 

References

Bhaskar, R. (January 01, 2014). Data Analysis for Dynamic Pricing in Airline: The Role of Tactical Pricing. Journal of Cases on Information Technology (jcit), 16, 1, 14-22.

Broderick, S. (January 01, 2018). Fleet simplified, Aeromexico eyes Delta joint-venture opportunities. Aviation Week & Space Technology, 26.

Byrd, J., Hickman, K., & McPherson, M. (2013). Managerial Finance [Electronic version]. Retrieved from https://content.ashford.edu/  

Reynolds-Feighan, A. (November 01, 2018). US feeder airlines: Industry structure, networks and performance. Transportation Research Part A, 117, 142-157.

Wahlen, J. M., Baginski, S. P., & Bradshaw, M. T. (2018). Financial reporting, financial statement analysis, and valuation: A strategic perspective.