Factors affecting capital structure in airline companies

In this study, annual financial data between 2009 and 2019 of the 23 largest publicly available airline companies in the world in terms of capacity were used to investigate the factors affecting the capital structure decisions of airline companies. The relationship between dependent variables; short-term, long-term and total debt ratios and independent variables; profitability, liquidity, size, tangible asset structure, non-debt tax shield, firm risk, growth opportunities, interest coverage ratio, gross domestic product, inflation and passenger load factor was examined by panel data analysis. Beside, in order to investigate the effect of the state role in the partnership structure on the capital structure determinants, the sample was divided into two: flag carrier and private airline companies. Three models established between short, long and total debt ratios and the independent variables were re-run on each sample group. As a result of the study, it was seen that the factors affecting the capital structure decisions of airline companies were internal, macroeconomic and sectoral. Among intra-firm factors, growth opportunities are the only variable that is insignificant in all models. It has been determined that large, profitable and highly financial private companies tend to borrow less than state-supported flag carrier companies.