A Comparative Study on Financing Structures of Korean and Chinese Major Airlines

Abstract

This study mainly focuses on how Korean and Chinese airlines organize their own financing sources and how they act in the capital markets for financing. The development of the capital markets and government policies on the air transport industry have formed their current situation of financing structures. Government policies and market structures are explained along with the transportation performance of Korean and Chinese aviation industry. Four representative airlines are selected as samples in Korea and China to compare their financing structures. Main financial ratios are applied to compare their individual financial positions based on the financial statements. The comparison of financing structure is made from the aspects of leases, short-term and long-term debts and stockholders' equity that are directly related with the financing ability from the capital markets. Currently, the opening-up of the capital markets and the air transport industry is under way in China, which will undoubtedly provide Chinese airlines with various financing opportunities. Chinese airlines should grasp this opportunity in order to strengthen their capital structures for the furious competition.