Hi, I was asked how I would quickly compare two air plane companies (ie Air Canada, Air Transat, etc). One company owned there fleet and the other rented their fleet.
I suggested comparing the Company who owned their fleet's EV/EBITDA to the other Company's EV/EBITDAR.
Now I was a little confused how I would actually go about doing this. I am not sure how I would calculate the rental Company's EV value... should I capitalize their rent expense?
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Maybe it has to do with rent expense being an actual cash outflow while depreciation on the fleet would be a non-cash expense=different EBITDA numbers. Could you try removing the value of the fleet from EV and determine the cost to rent a comparable fleet? I would be interested in an answer to this question as well...
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