ABSTRACT
This chapter provides an overview of the role of finance in industry, and in particular, the airline industry. It discusses the globalization of the airline industry and the financial consequences of the developments. The chapter introduces the reader to the important concepts of accounting and economic profits. It also provides an overview of the various forms of business that a firm might choose and how each might affect the organization’s finances. The merger between American and United States Airlines closed at the end of 2013, creating the largest airline company in the world. In the United States, market concentration has increased due to merger and acquisition activity: United Airlines and Continental Airlines, Delta Airlines and Northwest Airlines, American Airlines and US Airways, and Southwest Airlines and AirTran Airways. Legacy carriers found it increasingly hard to change their cost structures fast enough to face formidable competition.
