Corporate resilience to the COVID-19 pandemic: Evidence from the airline industry

Abstract

This study investigates whether airline firm characteristics moderate the negative impact of rising COVID-19 confirmed cases on airlines’ stock. 87 listed airlines in 44 countries during 2020 are examined with a panel regression. The findings indicate that airline firm size and the number of destination countries reduce the negative effect of the pandemic. The impact of COVID-19 and firm size are significant only during the early stage of the pandemic due to high uncertainty. While the impact of COVID-19 is significant in the U.S. and other regions, it is not the case in China. In addition, the pandemic has had a greater impact on low-cost airlines than on full-service airlines. The study relates the findings to the size advantages and the benefit of diversification. While mergers and acquisitions are a promising business strategy for survival, governments and regulators are necessary to balance the market power of survival and new entrants in the future.