continentalairlinesvs 100412203113 phpapp02 (2)

8/11/2019 Continentalairlinesvs 100412203113 Phpapp02 (2)

http://slidepdf.com/reader/full/continentalairlinesvs-100412203113-phpapp02-2 1/16

Continental Airlines Vs.Southwest Airlines

Finance 5000

Spring 2009

http://www.southwest.com/?ref=home_gn

http://www.continental.com/web/en-US/Default.aspx



Continental Airlines

• Headquarters: Houston, TX

• Symbol: CAL

•

Exchange: NASDAQ• Stock Price (21APR) $15

• http://www.continental.com/web/en-

US/content/company/investor/docs/continental_10k_2008.pdf

http://www.continental.com/web/en-US/content/company/investor/docs/continental_10k_2008.pdf










• Destinations served: 282

– (144 domestic; 138 international)1

•

Annual passengers: 67 million

2

• Daily passengers: 183,000 average

• Daily departures: 3,100

•Employees: 45,000

• Fleet size: 634





• Serves more international destinations thanany other US carrier.

• Continental operates a fleet of 351 mainline jets.

•

70 percent of fleet is Boeing 737 seriesaircraft, allowing for greater efficiencies intraining and simplified maintenance





Southwest Airlines

• Headquarters: Dallas, TX

•

Symbol: LUV• Exchange: NASDAQ

• Stock $ (21APR) $7.53

• Employees 35,000




• Destinations served: 67

– Domestic Flights Only

•

Annual passengers: 1.1 million• Daily departures: 3,300

• Employees: 35,000

•

Fleet size: 536

Southwest Airlines




Southwest Airlines

• Southwest currently operates 536 Boeing 737

jets. Average age 9 years

• Consistently received the lowest ratio of

complaints per passengers boarded of all

Major U.S. carriers

• Ranked as the largest U.S. carrier in terms of

passengers carried

•






COMPARISON

CONTINENTAL SOUTHWEST

• Destinations served: 282 International 67 cities in 34 states

• Annual passengers: 67 million 101.9 Million

• Daily departures: 3,100 3,300

• Employees: 45,000 35,000

• Fleet size: 634 536

•

Average Fleet age 10.2 9






Balance SheetContinental Southwest

Current Assets

Cash and Equivalents $ 2,355,000 $ 1,368,000

Short Term Investments 478,000 435,000

Net Receivables 669,000 574,000

Inventory 235,000 203,000

Other Current Assets 610,000 313,000

TOTAL CURRENT ASSETS $4,347,000 $14,308,000

Long Term Investments

Fixed 7,327,000 11,040,000

Intangible 804,000 84,000Other 208,000 291,000

Current Liabilities

Accounts Payable 3,955,000 2,643,000

Short Term Debt 519,000 163,000

TOTAL CURRENT LIABILITIES 4,474,000 2,806,000

Long Term Debt 5,371,000 3,498,000

Other Liabilities and deferred charges 2,736,000 3,051,000TOTAL LIABILITIES $12,581,000 $9,355,000

Stock Holders Equity

Common Stock 1,000 808,000

Capital Surplus 1,997,000 1,215,000

Retained Earnings (137,000) 4,919,000

Treasury Stock 0.00 (1,005,000)

Other Equity (1,756,000) (984,000)

Total Equity $105,000 $4,953,000








IncomeStatementContinental Southwest

Total Revenue $ 15,241,000 $ 11,023,000

Cost of Revenue 12,782,000 8,590,000

Gross Profit 2,459,000 2,433,000

Operating Expenses

Sales, Admin, Gen 2,154,000 1,385,000

Non-recurring Items 181,000 0.00

Other Operating Items 438,000 599,000

Operating Income (314,000) 449,000

Additional Income (38,000) (66,000)

Earnings before Interest and Tax (352,000) 383,000

Interest Expense 332,000 105,000Earnings before Tax (684,000) 278,000

Income Tax (99,000) 100,000

Net Income Operations (585,000) 178,000

Net income (585,000) 178,000

Net Income Applicable to (585,000) 178,000

Shareholders






Cash Flows

Continental Southwest

Net income $(585,000) $178,000Cash Flows Operating Activities

Depreciation 438,000 587,000

Net Income Adjustments 188,000 74,000

Changes in Operating Activities

Accounts Receivable 147,000 71,000

Inventory 5,000

Other Operating Activities (167,000) (610,000)

Liabilities (350,000) (1,821,000)

Net Cash Flow-Operating $(324,000) $(1,521,000)Cash Flows-Investing Activities

Capital Expenditures (504,000) (923,000)

Investments 286,000 (55,000)

Other Investing Activities 202,000 0.00

Net Cash Flows – Investing $(16,000) $(978,000)

Cash Flows _ Financing ActivitiesDividends Paid (13,000)

Sale and Purchase of Stock 376,000 63,000

Net Borrowings 1,000 1,609,000

Other Financial Activities 0.00 (5,000)

Net Cash Flows – Financing $377,000 $1,654,000

Net Cash Flow $37,000 $(845,000)






Financial Ratios

Continental Southwest

Liquidity Ratios

Current Ratio 97% 103%

Quick Ratio 78% 85%

Cash Ratio 63% 64%

Inventory Turnover 6,486% 5,530%

Profitability Ratios

Gross Margin 16% 22%

Operating Margin -2% 4%

Pre-Tax Margin -4% 3%

Profit Margin -4% 2%Pre-Tax ROE -651% 6%

After Tax ROE -557% 4%






Risk Analysis



Recommendations


continentalairlinesvs 100412203113 phpapp02 (2)

Documents