A financial history and analysis of the United States airline industry.

This dissertation analyzes the financial history of the U.S. airline industry from the perspectives of earnings, dividends, risk and capital structure. The airline industry is chosen because of its transition from economic regulation to competition. Within the area of earnings, I examine the impact of deregulation on the mean-reversion behavior of earnings documented by Fama and French (2000). Next, I examine the impact of dividends on the variation of carriers' stock returns. Then, I extend this relation by examining the impact of specific industry characteristics, deregulation, air crashes and the events of 9/11, on both the total and market risk of the industry's stock returns. I also examine the effect of inflation on shareholder returns using the consumer price index as a proxy. I then examine the effect of deregulation and stock returns on debt ratio behavior. Finally, I examine the relation between operating leases and operating performance.