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Delta Air Profitability Ratios

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Financial Analysis:
Throughout the thesis, DAL stands for Delta Air Lines and UCH stands for United Continental Holdings.
Profitability Ratios:

Operating Profit Margin:
FY14
The decrease of operating margin by 3.52 points was by increase of revenue by 6.85% but following an increase of expenses by 11%. Increase in revenue was by increase of domestic flight revenue by 12% (Delta Performance 2014), personal income and customer confidence (U.S Global Investors 2015) along with increased fares by mergers of airlines (Cronan 2014). Delta increased its connections with Aeromexico and GOL which further increased Latin America region access by 15% (Airline Leader 2015). All these factors contributed in increasing revenue. Increased expense was …show more content…

It increased revenues lower than Delta by restructuring fares (Newman 2014).The expenses were lowered by cost saving program (UCH 2014) and acquiring 76 seat fuel efficient planes (Cederholm 2014). The improved performance of UCH as compared to DAL lies in its cost cutting initiatives whereas DAL saw a major increase in expenses.
FY15
DAL’s operating margin increased by 13.7 points. Operating revenue saw a slight increase by 1% but expenses shrunk by 14%. Revenue was decreased due to tough competition of lowered air fares in domestic flights (Trefis 2015). The currency fluctuations (Dollar Strength 2015) increased expenses as Latin America negatively influenced revenue (Monica 2016). The fuel expenses decreased by 44% saving 5.1 billion dollars (Monica 2016), along with help of DAL’s refinery. Salaries expense increased due to announcement of increased pay for employees (Black 2015).
UCH Comparison:
UCH OPM almost doubled due to considerable increase of income by 118% by controlling costs. The OPM of UCH is still lower than DAL. Because even if the fuel expenses lowered for UCH, the cost was 2.02$ per gallon (UCH 2015) which is higher than DAL Also due to various agreements, the salaries expense of UCH was more than DAL, overall lowering its operating margin. Overall, DAL performed better by highly saving its fuel costs as compared to the

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