Type of Submission
Invited Article
Abstract
The airline industry plays an important role in the global economy but faces financial challenges. Numerous firms have filed for bankruptcy protection or have liquidated completely, each instance having a devastating effect on the company’s stakeholders. The objective of this study is to compare a traditional bankruptcy prediction model with a proposed alternative model, with the goal of identifying a means of predicting the combinations of characteristics that are present when an airline is likely to fail. The alternate model proved to be more accurate than the traditional model in predicting bankruptcy, providing improved forecasting up to four years prior to the bankruptcy filing date. Airlines can use this model to deploy corrective measures to alter the firm’s underlying problems, redefine strategies, and avoid bankruptcy, while investors can use this model to avoid or reduce investments in questionable firms that cannot be salvaged.
DOI
https://doi.org/10.7275/nqny-pc47
Recommended Citation
Kroeze, Carla; Zemke, Dina Marie V.; and Raab, Carola
(2018)
"Improving Airline Bankruptcy Prediction,"
Journal of Hospitality Financial Management: Vol. 26:
Iss.
2, Article 6.
DOI: https://doi.org/10.7275/nqny-pc47
Available at:
https://scholarworks.umass.edu/jhfm/vol26/iss2/6