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

Bebonchu Atems and Jules Yimga

Journal of Air Transport Management, 2021, vol. 97, issue C

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.

Keywords: Coronavirus; Airline industry; Stock prices (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaitra:v:97:y:2021:i:c:s096969972100123x

DOI: 10.1016/j.jairtraman.2021.102141

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