Skip to main content

LUP Student Papers

LUND UNIVERSITY LIBRARIES

Has Risk Capital Increased Airlines Capabilities to Respond to Crisis

Blecher, Filip LU and Persson, Oskar LU (2021) BUSN79 20211
Department of Business Administration
Abstract
Purpose: This paper aims to empirically investigate if pre-pandemic risk-capital was able to
mitigate the negative impact of the COVID-19 pandemic on employees and investments in
the airline industry
Method: The base econometric methodology used is multiple regression analysis with the
four risk capitals interacting with a dummy variable for the year 2020 when the COVID-19
pandemic hit.
Theory: The broad theoretical framework is based on financial constraints and risk capital in
the form of economic capital and risk capacity.
Empirical foundation: 399 firm-year observations from the airline industry between 2016
and 2020 make up the empirical foundation of this paper.
Conclusions: Liquidity in the form of cash reserves was proven... (More)
Purpose: This paper aims to empirically investigate if pre-pandemic risk-capital was able to
mitigate the negative impact of the COVID-19 pandemic on employees and investments in
the airline industry
Method: The base econometric methodology used is multiple regression analysis with the
four risk capitals interacting with a dummy variable for the year 2020 when the COVID-19
pandemic hit.
Theory: The broad theoretical framework is based on financial constraints and risk capital in
the form of economic capital and risk capacity.
Empirical foundation: 399 firm-year observations from the airline industry between 2016
and 2020 make up the empirical foundation of this paper.
Conclusions: Liquidity in the form of cash reserves was proven to be the most efficient risk
capital at absorbing revenue shocks and mitigating reductions in both employees and
investments in the airline industry. Moreover, economic capital in the form of a higher equity
ratio had a positive relationship with investments. No strong support was found for cash
margin or operating flexibility to have any buffering effects. (Less)
Please use this url to cite or link to this publication:
author
Blecher, Filip LU and Persson, Oskar LU
supervisor
organization
alternative title
Pre-pandemic risk capitals’ ability to mitigate the Impact of COVID-19 on employees and investments
course
BUSN79 20211
year
type
H1 - Master's Degree (One Year)
subject
keywords
Economic capital, risk capacity, Covid-19, airline industry, financial constraints
language
English
id
9064710
date added to LUP
2021-10-04 08:54:22
date last changed
2021-10-04 08:54:22
@misc{9064710,
  abstract     = {{Purpose: This paper aims to empirically investigate if pre-pandemic risk-capital was able to
mitigate the negative impact of the COVID-19 pandemic on employees and investments in
the airline industry
Method: The base econometric methodology used is multiple regression analysis with the
four risk capitals interacting with a dummy variable for the year 2020 when the COVID-19
pandemic hit.
Theory: The broad theoretical framework is based on financial constraints and risk capital in
the form of economic capital and risk capacity.
Empirical foundation: 399 firm-year observations from the airline industry between 2016
and 2020 make up the empirical foundation of this paper.
Conclusions: Liquidity in the form of cash reserves was proven to be the most efficient risk
capital at absorbing revenue shocks and mitigating reductions in both employees and
investments in the airline industry. Moreover, economic capital in the form of a higher equity
ratio had a positive relationship with investments. No strong support was found for cash
margin or operating flexibility to have any buffering effects.}},
  author       = {{Blecher, Filip and Persson, Oskar}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Has Risk Capital Increased Airlines Capabilities to Respond to Crisis}},
  year         = {{2021}},
}