Assessment of the Impact of Airlines External Environmental Factors on the Probability of Bankruptcy Risks in the Context of the COVID-19

Abstract

The paper analyses which external environmental factors had the greatest impact on the probability of airline bankruptcy risk in the pre-pandemic and pandemic periods. In view of the strengths and weaknesses of the models selected and presented, the Altman Z 'score model was chosen for the study. It has been modified by recalculating the coefficients for the model's weighted indicators. The investigation included environmental macroeconomic statistics and financial data of 49 airlines in the airline sector over the span of ten years (2011-2021). The correlation method has identified the severity of external factors in connection with bankruptcy risks during the pre-pandemic and pandemic timeframe and has established a correlation between fluctuations in the risk of bankruptcy of the airline sector and environmental factors. Based on the results obtained, conclusions were drawn on the link between external environmental factors and changes in the sector’s bankruptcy risk score in the context of the COVID-19 pandemic. The results of the comparative analysis method showed that the influence of environmental factors analysed in Europe, North America, South America, and Oceania differs due to the predominance of business culture in the region. Overall, however, legal factors had the biggest negative impact on the sector before the COVID-19 pandemic (2011-2018), while other factors (passengers, competitors, labour force, and creditors) were weakly correlated with the likelihood of bankruptcy risk. During the COVID-19 pandemic, the most positive relationship between creditors intensified.

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“…Impact of the quarantine regime on the level of investments according to the sector. References (Adnan and Hasan 2021;Ali et al 2022;Asteriou et al 2023;Clark et al 2021;González and Gallizo 2021;Hasnaoui et al 2021;Huynh et al 2021;Kurien ė 2022;Liedtke 2021;Liu et al 2022;Lutfi et al 2022;Nguyen and Vu 2021;Nikolajenko et al 2021;Pileckait ė and Subačien ė 2023;Pourmansouri et al 2022;Rahman et al 2022;Ramachandran et al 2021;Raza et al 2022;Senkus et al 2022;Shabir et al 2023;Simoens and Vander Vennet 2022;S ūdži ūt ė and Jakubavičius 2022;Toth et al 2022;Wulandari et al 2022;Zheng and Zhang 2020;Žinyt ė and Jurkonien ė 2023) are cited in the supplementary materials.…”