Determinants of financial distress in the European air transport industry: The moderating effect of being a flag-carrier

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, potent...

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Autores principales:	Yin Shi, Xiaoni Li
Formato:	article
Lenguaje:	EN
Publicado:	Public Library of Science (PLoS) 2021
Materias:	Medicine R Science Q
Acceso en línea:	https://doaj.org/article/af63378cb8b44d758e82396ffdcdab9b
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spelling	oai:doaj.org-article:af63378cb8b44d758e82396ffdcdab9b2021-11-25T06:10:55ZDeterminants of financial distress in the European air transport industry: The moderating effect of being a flag-carrier1932-6203https://doaj.org/article/af63378cb8b44d758e82396ffdcdab9b2021-01-01T00:00:00Zhttps://www.ncbi.nlm.nih.gov/pmc/articles/PMC8592452/?tool=EBIhttps://doaj.org/toc/1932-6203Due 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.Yin ShiXiaoni LiPublic Library of Science (PLoS)articleMedicineRScienceQENPLoS ONE, Vol 16, Iss 11 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	Medicine R Science Q
spellingShingle	Medicine R Science Q Yin Shi Xiaoni Li Determinants of financial distress in the European air transport industry: The moderating effect of being a flag-carrier
description	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.
format	article
author	Yin Shi Xiaoni Li
author_facet	Yin Shi Xiaoni Li
author_sort	Yin Shi
title	Determinants of financial distress in the European air transport industry: The moderating effect of being a flag-carrier
title_short	Determinants of financial distress in the European air transport industry: The moderating effect of being a flag-carrier
title_full	Determinants of financial distress in the European air transport industry: The moderating effect of being a flag-carrier
title_fullStr	Determinants of financial distress in the European air transport industry: The moderating effect of being a flag-carrier
title_full_unstemmed	Determinants of financial distress in the European air transport industry: The moderating effect of being a flag-carrier
title_sort	determinants of financial distress in the european air transport industry: the moderating effect of being a flag-carrier
publisher	Public Library of Science (PLoS)
publishDate	2021
url	https://doaj.org/article/af63378cb8b44d758e82396ffdcdab9b
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Determinants of financial distress in the European air transport industry: The moderating effect of being a flag-carrier

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