ABSTRACT
This chapter introduces the issue of the absence of sizeable intangible assets such as route rights and slots in most airline accounts. It examines how these might be valued for international airlines, and reviews various approaches to valuing all or part of such airlines. This problem is faced by advisers to governments on the privatisation of their national airlines, as well as the pricing of equity in an Initial Public Offering. An airline's intangible assets would include mainly its route/traffic rights, and the rights to take-off and landing slots at congested airports. Assets, here should include all intangible assets such as traffic rights, airport slots, concessions, patents or trademarks. Tangible assets cover both the fixed or physical assets of an airline and the long-term investments in other companies or airlines. Investment bank valuation is usually based on a combination of ratio analysis and the discounted cash flow method.
