Assessing the Probability of Default During the COVID-19 Pandemic: The Case of Airlines

Elizaveta Markovskaya () and Elena Smolina
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Elizaveta Markovskaya: National Research University Higher School of Economics
Elena Smolina: National Research University Higher School of Economics

Chapter Chapter 9 in Systemic Financial Risk, 2024, pp 217-252 from Springer

Abstract: Abstract The chapter is devoted to the development of the approaches to assessing the probability of European airlines’ default. This problem has become very acute since the latest crisis when airlines all over the world went through hard times and dozens of them had to go bankrupt, get public financial aid or find a way-out in the form of M&A deals with greater players on the market which enjoyed support from the governments. Since the beginning of the COVID-19 pandemic, airlines all over the world faced serious problems which forced them to halt most of their passenger flights because of the restrictions on cross-border trips. Unlike other crises, the pandemic has the most severe uncertainty problem because it is difficult to predict how the virus behaves and when it stops. This research is aimed at developing the approaches which can help identify and predict the possible bankruptcy of the airline companies through a model of bankruptcy prediction. The sample consists of the great players representing European countries. The originality of this research is that the existing models are usually universal and do not consider the specific features of the airline industry, although it is very important nowadays. It is one of the most affected industries which has a systemic effect on the economy as a whole. Also, it is important to note that although there are a few models of airlines’ bankruptcy prediction in the literature, they were developed a long time ago, thereby requiring an update.

Keywords: Probability of bankruptcy; Airline companies; Pandemic crisis; G23; G33 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-54809-3_9

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DOI: 10.1007/978-3-031-54809-3_9

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