The impact of the Russia-Ukraine war on the competitiveness of European airlines
Abstract
Purpose – The research identifies the impact of the Russia-Ukraine war on the stock prices of six publicly traded European airlines and evaluates their ability to adapt to this situation.
Research methodology – The dependence of the development of airline stock prices on the level of public and institutional stress due to the war was measured using GoogleTrends and is analysed on the basis of a Vector Autoregression model (VAR).
Findings – A short-term negative relationship was confirmed between the development of stock prices and GoogleTrends; the impact of the stress related to the war was negligible about 5 months after the outbreak thereof. Those companies that were the fastest to adapt to the shock of the war in terms of share prices are identified.
Research limitations – The link between GoogleTrends, as an input variable reflecting market sentiment, and the stock prices of European airlines, is considered a limitation.
Practical implications – The impact of investor sentiment on the returns on the stocks of airlines is a thing of the past; which is an important finding for financial market participants and airlines alike.
Originality/value – The ability of the specific airlines to adapt to the shock of war creates a competitive advantage.
Keyword : air transport, share price, GoogleTrends, VAR model, war
How to Cite
Hašková, S., Šuleř, P., & Divoká, L. (2024). The impact of the Russia-Ukraine war on the competitiveness of European airlines . Business, Management and Economics Engineering, 22(2), 255–277. https://doi.org/10.3846/bmee.2024.20207
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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An, Z., Chen, C., Naiker, V., & Wang, J. (2020). Does media coverage deter firms from withholding bad news? Evidence from stock price crash risk. Journal of Corporate Finance, 64, Article 101664. https://doi.org/10.1016/j.jcorpfin.2020.101664
Aryal, G., Ciliberto, F., & Leyden, B. T. (2022). Coordinated capacity reductions and public communication in the airline industry. The Review of Economic Studies, 89(6), 3055–3084. https://doi.org/10.1093/restud/rdab100
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Basdekis, C., Christopoulos, A., Katsampoxakis, I., & Nastas, V. (2022). The impact of the Ukrainian war on stock and energy markets: A wavelet coherence analysis. Energies, 15(21), Article 8174. https://doi.org/10.3390/en15218174
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Borochin, P. (2020). The information content of real operating performance measures from the airline industry. Journal of Financial Markets, 50, Article 100528. https://doi.org/10.1016/j.finmar.2019.100528
Boungou, W., & Yatié, A. (2022). The impact of the Ukraine–Russia war on world stock market returns. Economics Letters, 215, Article 110516. https://doi.org/10.1016/j.econlet.2022.110516
Budd, L., Ison, S., & Adrienne, N. (2020). European airline response to the COVID-19 pandemic – Contraction, consolidation and future considerations for airline business and management. Research in Transportation Business & Management, 37, Article 100578. https://doi.org/10.1016/j.rtbm.2020.100578
Butler, S. D. (2021). Impacted publics’ perceptions of crisis communication decision making. Public Relations Review, 47(5), Article 102120. https://doi.org/10.1016/j.pubrev.2021.102120
Carter, D., Mazumder, S., Simkins, B., & Sisneros, E. (2022). The stock price reaction of the COVID-19 pandemic on the airline, hotel, and tourism industries. Finance Research Letters, 44, Article 102047. https://doi.org/10.1016/j.frl.2021.102047
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