Determinants Of Profitability Of Airline: The Case Of Ethiopian Airlines

Abstract

Profitability is undeniably important to the business's long-term viability and growth. Accordingly, investigating the factors that determine the profitability of Ethiopian Airlines is crucial for devising an appropriate strategy to increase the profitability of the corporation. Thus, the main objective of the study was to determine the determinants of Ethiopian Airlines profitability using the case of Ethiopia Airlines for the 2012-2021 period. To achieve this objective, the study adopted a quantitative research approach, and secondary data were collected from Ethiopian Airlines (EAL) publications and annual reports. The survey collected data for the period of ten years from 2012-2021 G.C. The collected data were entered into SPSS version 23 to make data presentation and analysis easy and understandable. The findings of the study revealed that industry growth and labor costs were positively and significantly associated with Airline profitability at a p value less than 0.05. This implies that a unit change in one of these variables leads to an increase in Ethiopia Airlines' profitability. The results of the study also found that leverage, rental cost, fuel cost, and lease cost were statistically significant and negatively associated with airline profitability at a P value less than 0.05.The research recommends that management and other concerned devise strategies to enhance profitability in the airline industry by reducing costs that affect profitability. In addition, Ethiopia AirLine should focus on the expansion of its network to the area where an airline already has a competitive advantage and is often dependent on aggressive pricing strategies to carve out its shares.