As among the most highly capital-intensive industries, airlines require a substantial investment in physical assets to fund operations. As a consequence, depreciation of these assets constitutes a major operating expense.
Although approximations and procedures for establishing depreciation expense used can differ across sectors, it is common for similar divergence to occur among firms within precisely the same sector as well. Aircraft-related depreciation expense depends upon estimating the residual value of the aircraft and also the useful life. These measurements can vary widely amongst airlines as a consequence of several factors including differences in corporate strategy, flying layouts, and fleet composition. Because of this, expectations and differing practices can get no small effect on the reported financial results of every airline.
This is just an excerpt. This case is about FINANCE & ACCOUNTING
PUBLICATION DATE: April 26, 2015 PRODUCT #: A224-HCB-ENG
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