Repositori URV

Identificador: imarina:9242240

Handle: https://hdl.handle.net/20.500.11797/imarina9242240

Autors:
Shi YLi X

Resum:
Due to the COVID-induced global collapse in demand for air travel, the year 2020 was a catastrophic one for the aviation industry. A dramatic drop in operating revenues along with continuing fixed expenses drained the cash reserves of airlines, with consequent risks of financial distress and, potentially, even of bankruptcy. Flag-carriers are a special group in the airline business—they are considered to have privileges in terms of the support given by governments while, on the other hand, are often viewed as having low efficiency and performance. This study aims to estimate for European airlines the interaction effect of being a flag-carrier (flagship) with the relationship between leverage, liquidity, profitability, and the degree of financial distress. Findings obtained from analysing 99 European airlines over a period of ten years, indicate that the negative influence of leverage on financial stability is higher in the case of flag carriers (flagship). The impact of liquidity and profitability on financial health is more positive for flagship than for non-flagship carriers. These findings are not limited to contributing to the existing literature, but also have significant practical implications for executives, managers, and policy makers in the European air transport sector. © 2021 Shi, Li. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.