International Corporate Risk Management : A Comparison of Three Major Airlines

Professorship/Faculty: Banking and Financial Control  
Author(s): Muck, Matthias ; Rudolf, Markus
Title of the compilation: Risk management : challenge and opportunity ; with 125 tables
Editors: Frenkel, Michael; Rudolf, Markus; Hommel, Ulrich
Publisher Information: Berlin [u.a.] : Springer
Year of publication: 2005
Pages: 571-590
Illustrations: Diagramme
Edition: 2
ISBN: 978-3-540-22682-6
Language(s): English
DOI: 10.1007/3-540-26993-2_29
In addition to catastrophe and operational risks like e.g. the terrorist attacks on the World Trade Center airlines are exposed to substantial capital market risks. This study examines the cases of three major airlines including Lufthansa, United Airlines, and Qantas. Their risk profiles are analyzed with respect to commodity and exchange rate risks by applying the “Earnings at Risk”-concept to the profit and loss statements of the year 2003. Furthermore, potential hedging strategies are explored. It turns out that airlines are especially sensitive to movements of the oil price. However, hedges can provide (partial) protection against adverse movements of the risk factors.
Keywords: Corporate Risk Management, CorporateMetrics, Earnings at Risk, Frequency Distribution, Monte Carlo Simulation
Document Type: Contribution to an Articlecollection
Year of publication: 28. October 2013