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

ABSTRACT: 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.

SUBMITTER: Shi Y

PROVIDER: S-EPMC8592452 | biostudies-literature |

REPOSITORIES: biostudies-literature

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Project description:Over the last few years, many European and North American countries have reported a high rate of disorders (mortality, dwindling and disappearance) affecting honeybee colonies (Apis mellifera). Although beekeeping has become an increasingly professional activity in recent years, the beekeeping industry remains poorly documented in Europe. The European Union Reference Laboratory for Honeybee Health sent a detailed questionnaire to each Member State, in addition to Kosovo and Norway, to determine the demographics and state of their beekeeping industries. Based on data supplied by the National Reference Laboratory for honeybee diseases in each European country, a European database was created to describe the beekeeping industry including the number and types of beekeepers, operation size, industry production, and health (notifiable diseases, mortalities). The total number of beekeepers in Europe was estimated at 620,000. European honey production was evaluated at around 220,000 tons in 2010. The price of honey varied from 1.5 to 40 €/kg depending on the country and on the distribution network. The estimated colony winter mortality varied from 7 to 28% depending on the country and the origin of the data (institutional survey or beekeeping associations). This survey documents the high heterogeneity of the apicultural industry within the European Union. The high proportion of non-professional beekeepers and the small mean number of colonies per beekeeper were the only common characteristics at European level. The tremendous variation in European apicultural industries has implication for any comprehensive epidemiological or economic analysis of the industry. This variability needs to be taken into account for such analysis as well as for future policy development. The industry would be served if beekeeping registration was uniformly implemented across member states. Better information on the package bee and queen production would help in understanding the ability of the industry to replace lost honey bee stocks.

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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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