Work

Airline industry equities under external uncertainty shocks

Year: 2024

Type: article

Abstract: We gauge the impact of news and other relevant external uncertainties facing airline firms via an equity market lens. Using local projections, we establish that rising investors’ fear shocks have long-lasting negative effects on airline industry equity returns, while increasing geopolitical, climate policy, and fuel cost uncertainties have comparatively short-lived impacts. Our results are robust to several alternative model specifications, including a pre-pandemic subsample. Based on our findings, we provide a promising avenue for future research in airline financial management. • External uncertainties facing airline firms are examined via an equity market lens. • Investors’ fear shocks have longer-lasting negative effects on the airline industry. • Geopolitical, climate policy, and fuel cost uncertainties have shorter-lived impacts.

Source: Economics Letters

DOI: 10.1016/j.econlet.2024.111994

Authors: Nicolás Blampied, Scott Mark Romeo Mahadeo

Institutions: Masaryk University, University of Portsmouth

Language: English

Topic: Market Dynamics and Volatility

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $2,980

Funders: European Commission, Ministerstvo Školství, Mládeže a Tělovýchovy, Masarykova Univerzita