Determinants Of Capital Structure In Airline Industry An Empirical Study On Major Airlines In Africa

Airline Industry is very dynamic, competitive, highly capital intensive and critical forrnsustainability. This study examines internal factors affecting the capital structure of fivernmajor airlines in Africa. It also explores the applicable capital structure theories used inrndetermining capital structure using sixteen-year data from year 2002-2017.The studyrnused quantitative method research approach by using secondary data from auditedrnfinancial statements and other officially published documents. To deliver the mostrnreliable factors fixed effect model was applied. The findings of the study show thatrnprofitability, liquidity, growth opportunity have statistically significant and negativernrelationship with leverage, firm size has a significant and positive relationship withrnleverage. Lease financing, Collateral value of asset and non-debt tax shield also havernnegative relationship with leverage but the result was insignificant. Finally, it isrnrecommended African airlines to focus internal factors affecting the capital structure andrnto focus internal financing sources before demanding external financing sources,rnfurthermore it recommended to use the most applicable peaking order theory as a guidernline when determining the capital structure in order to maintain sustainability, add valuernand develop in the industry by avoiding in liquidity and bankruptcy problems.

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