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Quantifying the impact of the COVID-19 pandemic on US airline stock prices

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  • Atems, Bebonchu
  • Yimga, Jules

Abstract

This paper uses data at the trading day frequency and the method of local projections to quantify the dynamic responses of U.S. airline stock prices to a COVID-19 shock. We show that airline stock prices decline immediately by 0.1 percentage point in response to a 1% COVID-19 shock. In addition, the effect of the shock persists beyond the day on which it occurs, with most airline stock prices falling by as much as 0.6 percentage points after fifteen days. This negative response of airline stock prices to a COVID-19 shock is not explained by a COVID-19-induced increase in airlines’ variable costs, but rather by a COVID-19-induced decrease in air travel, which, in turn decreases revenues, profitability, and stock prices of U.S. airlines.

Suggested Citation

  • Atems, Bebonchu & Yimga, Jules, 2021. "Quantifying the impact of the COVID-19 pandemic on US airline stock prices," Journal of Air Transport Management, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:jaitra:v:97:y:2021:i:c:s096969972100123x
    DOI: 10.1016/j.jairtraman.2021.102141
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    2. Michal Drabek & Daniel Pastorek, 2023. "The impact of ownership structure on the market value of companies in response to COVID-19," MENDELU Working Papers in Business and Economics 2023-87, Mendel University in Brno, Faculty of Business and Economics.
    3. Tanrıverdi, Gökhan & Merkert, Rico & Karamaşa, Çağlar & Asker, Veysi, 2023. "Using multi-criteria performance measurement models to evaluate the financial, operational and environmental sustainability of airlines," Journal of Air Transport Management, Elsevier, vol. 112(C).
    4. Daniela Penela & Miguel Palma, 2023. "Risk Factor Disclosures in the US Airline Industry Following the COVID-19 Pandemic," Risks, MDPI, vol. 11(2), pages 1-24, February.

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