Impact of COVID-19 on different business models of European airlines

Kökény, László, Kenesei, Zsófia and Neszveda, Gábor (2021) Impact of COVID-19 on different business models of European airlines. Current Issues in Tourism . DOI

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In addition to social damage, the first wave of the COVID-19 pandemic also caused huge economic losses in the beginning of 2020, especially for companies in the tourism sector. The airline market was no exception. This study examines the significance of the business model of European listed airlines – low cost carriers (LCCs), full service carriers (FSCs) – for stock market performance. We use event study on the 11 airlines included in the sample. In terms of cumulative average abnormal returns, i.e. the most significant deviations from expected returns, negative phases can be detected in the entire and third stage of the pandemic. FSCs performed significantly better than LCCs at the time of the pandemic on 24 February, when European stock markets suffered the most damage; the business model overwrote financial indicators during the toughest period of the crisis. Although most LCCs had higher cash/ assets ratios, they still produced worse results than the average performance of companies with lower cash/assets ratios. This analysis helps to ensure that, in addition to examining financial indicators, the enumeration of the business model in this industry can also be decisive. The future possibilities of the research are discussed at the end of the study.

Item Type:Article
Uncontrolled Keywords:COVID-19, low-cost carriers, full-Service carriers, business model, cash, event study
Subjects:Economic development
Commerce and tourism
Social welfare, insurance, health care
ID Code:6740
Deposited By: MTMT SWORD
Deposited On:26 Aug 2021 08:54
Last Modified:26 Aug 2021 08:54

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