MATH1031 Users of Mathematics - Commercial Aviation

Summary

Kendra, a credit research analyst with expertise in aviation and financial modeling, discusses her experience analyzing airport and airline credit. She highlights the importance of understanding airport revenue streams, including aeronautical charges, retail, and ground transport. Kendra emphasizes the role of mathematics and problem-solving in credit analysis, explaining how financial models and matrices are used to determine the optimal cost of capital. She also reflects on her educational background in aviation and business statistics, and shares a memorable experience of hands-on learning with aircraft during her bachelor's degree.

Takeaways

• 🛫 Kendra is a credit research analyst focusing on airport and airline credit.
• 🎓 She holds a Bachelor of Aviation and a Master of Commerce, majoring in business statistics.
• 💼 Key factors for airport credit include revenue from aeronautical services, such as passenger charges, retail, and ground transport.
• 📊 Kendra's strong aviation and mathematical skills help her analyze airport and airline finances.
• 🧠 She emphasizes the importance of problem-solving in mathematics, beyond just calculating numbers.
• 💻 Computers assist in calculating mechanics, but analysts need to identify the right formulas and approaches.
• 💳 As a credit analyst, Kendra deals with numbers like probability of default, leverage, and revenue.
• 📈 The cost of debt increases with leverage, impacting credit ratings and financial risks.
• 📉 Understanding Weighted Average Cost of Capital (WACC) involves analyzing debt costs at different leverage levels.
• ✈️ One of Kendra's best memories during her aviation degree was visiting an airport and learning about aircraft mechanics hands-on with her classmates.

Q & A

What is Kendra's current role?

Kendra is a credit research analyst, focusing primarily on airport and related credit assessments.

What is Kendra's educational background?

Kendra has a Bachelor of Aviation and a Master of Commerce, with a major in business statistics.

What are the key factors that impact airport credit performance, according to Kendra?

Key factors include the airport's revenue, particularly aeronautical revenue, which is derived from passenger usage charges, retail, and ground transport.

How does Kendra’s aviation knowledge contribute to her role?

Kendra’s solid aviation and airline knowledge, combined with her mathematical skills, helps her understand financial models and analyze credit performance.

How did Kendra's perspective on mathematics change during her studies?

Initially, Kendra viewed mathematics as mechanics, focusing on calculations. However, she now sees it as problem-solving, requiring the right formulas and approaches for practical application.

What is the role of computers in Kendra's financial analysis work?

Computers help with mechanical calculations, but Kendra emphasizes the importance of finding the right formulas and approaches to feed into the computer for accurate results.

What mathematical concepts does Kendra frequently use in her work as a credit and financial analyst?

Kendra deals with numbers related to probability of default, leverage, revenue, and the weighted average cost of capital (WACC), which involves both the cost of equity and cost of debt.

How does leverage affect the cost of debt and credit rating, according to Kendra?

Higher leverage increases the risk for lenders, leading to a lower credit rating and higher cost of debt.

What is WACC and how is it calculated?

WACC, or weighted average cost of capital, is the overall cost of capital for a company. It is calculated using a matrix that includes different leverage levels and the corresponding cost of debt, reflecting lender risk.

What experience from her bachelor’s degree does Kendra recall fondly?

Kendra recalls visiting an airport with her classmates, where they took apart aircraft and learned about different parts of the fleet, which she found memorable.