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Explain which industry of these two; (1): Airline industry and (2): Health industry has a higher...

Explain which industry of these two; (1): Airline industry and (2): Health industry has a higher financial risk and why?

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Answer-

Airline Industry hasa higher financial risk than Health industry

Airline industry has to bear thefuel cost ie Airline Turbine fuel ( ATF) which is very expensive andhas a share of around 50 -60 % of the operational costs.

Airlines industry have cut throat competition and are capital iintensive and have high leverage or debt in their balance sheet. The filling of seats in economy and executive classes is highly discounted due to competition among aitrlines.

Consider the scenaios when there is slowdown in 2008 or the present pandemic crisis of COVID which has completely wrecked the Airline industry and pushed it into severe crisis.

Health industry is completely defensive and it always works well irrespective of economic cycles. It has beemn performing well and is less risky than Airlines industry. It has some risks involved with drug approvals and patent expiries however these can be overcome as the demand for medicines and treatment of ailments is robust.   

jeff jeffy answered 2 years ago
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