Question: Consider the following data for the airline industry for December 2015 (EV = enterprise value, Book = tangible book value). Discuss the challenges of using

Consider the following data for the airline industry for December 2015 (EV = enterprise value, Book = tangible book value). Discuss the challenges of using multiples to value an airline.

Com pany Na me Delta Air Lines (DAL American Airines(AAL United Continental (UAL South west Airlines (LUV Alaska Air (ALK etBlue Airways (JBLU SkyWest (SKYw) Market Cap 40,857 27,249 22,000 2B 499 10,396 7,338 1,039 1,974 EV 45,846 38,937 28,522 28,125 9,870 8,189 2,590 2,281 EV/Sales EV/EBITDA EV/EBIT 5.0x 4.5x 4.2x 5.0x 6.3x 5.1x 5.2x 5.3x 1.1x 0.9x 0.7x 1.5x 1.Ex 1.3x 0.8x 1.0x 7.6x 5.5x 5.6x 7.4x 7.9x 7.9x 11.1x 6.9 P/E 15.0x 6.2x 3.4x 16.1x 13.4x 13.8x 21.2x 15.1x P/Book 4.0x 7.5x 2.6x 4.1x 4.4x 2.4x 0.7x 5.3x Source: Capital Q and Yahoo Finance

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