Financial analysis of civil reserve air fleet participants using data envelopment analysis

The United States Department of Defense's Civil Reserve Air Fleet (CRAF) consists of commercial air carriers which have agreed to augment the Air Force's air mobility and transport capabilities in times of national emergency. CRAF is expected to play a much more important national-defense role in the future since the Air Force has reduced its airlift capacity in response to the drawdown of forces initiated after the collapse of the Soviet Union and the corresponding budget reductions. In order for the Air Force to rely on the CRAF participants responding when needed, it is important that the participants be financially healthy. In the past the Air Force has lost CRAF participants Braniff Airlines, Eastern Airlines, and Pan Am Airlines due to bankruptcy and liquidation. This research assesses the financial stability of CRAF participants using data envelopment analysis complemented by ratio analysis.