The WACC of Air Partner PLC (AIR.L) is 8.6%.
Range | Selected | |
Cost of equity | 7.6% - 10.4% | 9% |
Tax rate | 29.5% - 34.1% | 31.8% |
Cost of debt | 4.0% - 6.7% | 5.35% |
WACC | 7.2% - 9.9% | 8.6% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 5.3% | 6.3% |
Adjusted beta | 0.87 | 1.02 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.6% | 10.4% |
Tax rate | 29.5% | 34.1% |
Debt/Equity ratio | 0.09 | 0.09 |
Cost of debt | 4.0% | 6.7% |
After-tax WACC | 7.2% | 9.9% |
Selected WACC | 8.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
AIR.L | Air Partner PLC | 0.09 | 1.04 | 0.99 |
AEGN.AT | Aegean Airlines SA | 1.3 | 1.3 | 0.69 |
ENT.WA | Enter Air SA | 1.49 | 0.41 | 0.2 |
GMAA.L | Gama Aviation PLC | 1.02 | -0.72 | -0.43 |
ICEAIR.IC | Icelandair Group hf | 1.78 | 0.75 | 0.34 |
NAS.OL | Norwegian Air Shuttle ASA | 0.95 | -0.11 | -0.07 |
PGSUS.IS | Pegasus Hava Tasimaciligi AS | 2.14 | 1.82 | 0.75 |
ALGT | Allegiant Travel Co | 2.03 | 1.47 | 0.62 |
CPA | Copa Holdings SA | 0.45 | 0.51 | 0.39 |
JBLU | JetBlue Airways Corp | 5.63 | 1.2 | 0.25 |
Low | High | |
Unlevered beta | 0.31 | 0.48 |
Relevered beta | 0.81 | 1.03 |
Adjusted relevered beta | 0.87 | 1.02 |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for AIR.L:
cost_of_equity (9.00%) = risk_free_rate (3.15%) + equity_risk_premium (5.80%) * adjusted_beta (0.87) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.