Airline Stock Performance: PRASM, RASM or Profit?

• Published in: 2020 12th International Conference on Knowledge and Systems Engineering (KSE) pp. 253 - 257
• Main Authors: Duc Thinh, Le, Ngoc Lam, Nguyen
• Format: Conference Proceeding
• Language: English
• Published: IEEE 12-11-2020
• Subjects: airlines; CASM-ex; Load factor; PRASM; profit; RASM; ROA
• DOI: 10.1109/KSE50997.2020.9287787

During some earnings call in 2016, there was a big argument between US airline executives and Wall Street analysts. Airline executives were frustrated that they were producing record profits but their stocks got hit or at least failed to go up in value. However Wall Street analysts claimed that PRASM or Passenger Revenue per Available Seat Mile - how much money airlines earn from passengers for every mile flown by each seat, is what drove airline stock price, not profit. In this article, we collect and analyze the data of eighteen (18) biggest airlines around the world from their official financial reports, including nine (09) main US airlines, in the period 2007-2019, to find out which key metrics has significant impact on airline stock returns. We collect the data of not only PRASM or gross profit margin, but also other key metrics such as RASM, CASM-ex, ROA. etc. We also analyze multiple regression models for airline stock returns and airline ROA.