Methodology

The methodology used to obtain the Financial Ratings published on this site is simple and transparent. These are the main steps employed to obtain the Financial Ratings published on this site.

  • First we identified the key criteria which we believe are indicators of the absolute and relative financial health of an airline and which are available for every airline in the sample.
  • Second, we apply weightings to each of these five parameters.
  • Third, we rank each airline on each of the parameters giving them between 1 and 8 points depending on their value for each parameter. Please see Ratings Criteria.
  • Fourth, we calculate the overall Financial Ratings Score for each airline. The airline's "FRS" is the weighted arithmetic average of the airline's score on each parameter. Each FRS corresponds to a TAA Financial Rating following a scale from AAA to CC. Please see Ratings Criteria.

TAA Financial Ratings are based on the most recent "Latest Twelve Month" ("LTM") data for each airline which renders the ratings more volatile than those of the rating agencies. This feature may make them leading indicators of changes by the rating agencies, who may wait for a trend to be confirmed before changing a rating.

TAA Financial Ratings provide ratings for the three most recent LTM periods so that trends in ratings are clearly identified. Also, we compare the TAA Financial Ratings with the public ratings from the three major rating agencies so that differences can be seen and analysed.

Find out more about the methodology used to create The Airline Analyst Financial Ratings.