Financial Resilience of Airlines During The Covid-19 Period

Abstract

One of the sectors most adversely affected by the negative economic impacts of the pandemic has been airline transportation, primarily due to international travel restrictions. During this period, airline companies, facing significant revenue losses, also experienced substantial declines in their stock prices. This study focuses on the stock market performance related to the measurement of financial resilience during the Covid-19 pandemic exhibited by the top 10 airline companies in terms of market capitalization. The study aims to create a forecast for investors in similar adverse events that may occur in the future. In this context, firstly, a resistance index was created to measure companies' resistance score against the pandemic by comparing the average stock prices before and during the pandemic period with the benchmark indices they are included in. Additionally, a recovery index was created to measure the recovery scores of companies after the pandemic by measuring the change in average stock prices between the pandemic period and the post-pandemic period. The results have shown that the stocks of low-cost carriers exhibited a significantly better resistance to the adversities of the pandemic. Additionally, companies that were able to provide high supply to meet the revived demand post-pandemic and create operational differences demonstrated better recovery.