The Interaction of Global Economy Mobility on the Financial Performance of Flagged Airlines

Abstract

This study examines the impact of global economic mobility and domestic production on revenue and EBITDA, which are income statement performance indicators of flagged carrier’s airline companies. The research question is whether the global economic trade mobility and domestic production will lead to an effect in the number of individuals traveling, and thus eventually affect the revenue and profitability performance of airline companies. There are studies in the literature that have selected macroeconomic indicators as affecting travel volume and financials. In this study, trade openness and direct investments represent the global economy's mobility. Short-term interest rates, oil prices and exchange rates are included in the model as a control variable. The results of the panel model indicate that trade openness have a positive effect on firms' revenues. Airline companies should develop their financial forecasts by monitoring the macroeconomic indicators that have shown significant results from empirical analysis.

Keywords

• Flagged Airlines
• Trade Openness
• GPD
• Revenues
• EBITDA

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