Consider the following data for the airline industry for August 1, 2012 (EV = enterprise value, Book
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Consider the following data for the airline industry for August 1, 2012 (EV = enterprise value, Book = tangible book value, NM = not meaningful because divisor is negative). Discuss the challenges of using multiples to value an airline.
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Company Name Delta Air Lines (DAL) United Continental (UAL) Southwest Airlines (LUV) US Airways (LCC) JetBlue Airways (JBLU) Alaska Air (ALK) SkyWest (SKYW) Hawaiian (HA) Market Cap 7,972.7 6,038.9 6,821.4 1,758.1 1,441.2 2,402.5 333.7 317.1 EV EV/Sales EV/EBITDA EV/EBIT 17,557.7 0.48x 4.1x 6.3x 10,781.9 0.29x 3.2x 5.3x 6,841.4 0.40x 4.0x 7.3x 3,726.1 0.27x 3.6x 3,122.2 0.65x 4.9x 2,174.2 0.48x 2.7x 1,551.5 0.42x 5.1x 480.8 0.27x 2.4x 4.8x 8.0x 4.0x 31.4x 3.9x P/E 8.7x 15.5x 21.1x 4.3x 11.9x 9.9x NM 5.5x P/Book NM NM 1.2x NM 0.8x 1.9x 0.3x 3.7x
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