20. Consider the following data for the airline industry for December 2015

(EV = enterprise value, Book = equity book value). Discuss the potential challenges of using multiples to value an airline.

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Market Enterprise Company Name Capitalization Value (EV) EV/Sales EV/EBITDA EV/EBIT P/E P/Book Delta Air Lines (DAL) 40,857 45,846 1.1x 6.0x 7.6x 15.0x 4.0x American Airlines (AAL) 27,249 38,937 0.9x 4.5x 5.5x 6.2x 7.5x United Continental (UAL) 22,000 28,522 0.7x 4.2x 5.6x 3.4x 2.6x Southwest Airlines (LUV) 28,499 28,125 1.5x 6.0x 7.4x 16.1x 4.1x Alaska Air (ALK) 10,396 9,870 1.8x 6.3x 7.9x 13.4x 4.4x JetBlue Airways (JBLU) 7,338 8,189 1.3x 6.1x 7.9x 13.8x 2.4x SkyWest (SKYW) 1,039 2,590 0.8x 5.2x 11.1x 21.2x 0.7x Hawaiian (HA) 1,974 2,281 1.0x 5.3x 6.9x 15.1x 5.3x Source: Capital IQ and Yahoo! Finance.