The impact of unemployment and GDP on airline stock performance: a multiregional study

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School of Business | Bachelor's thesis
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Date
2024
Major/Subject
Mcode
Degree programme
Rahoitus
Language
en
Pages
23 + 1
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Abstract
This study investigates the relationship between two macroeconomic factors and airline stock returns using an extended Fama-French model. Utilizing panel data from public airlines across Europe, North America, and Asia-Pacific from 2014 to 2023, I analyse the impact of changes in gross domestic product (GDP) and unemployment rate on stock returns. The findings suggest a significant linear relationship between stock returns and changes in GDP and unemployment rate. On average, a 1% increase in GDP is associated with a 1.272% increase in stock returns, while a 1% increase in the unemployment rate is linked to a 0.118% decrease in stock returns. In addition, the results highlight regional differences, with Asia-Pacific carriers demonstrating the least sensitivity to fluctuations in both GDP and unemployment rate. While the largest effect of GDP changes is visible for North American operators, fluctuations in unemployment levels have the largest impact on European carriers. The results underscore the importance of macroeconomic factors in understanding airline stock performance and have implications for further research in this area.
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Thesis advisor
Kokkonen, Joni
Keywords
airline industry, stock returns, macroeconomic factors, gross domestic product, unemployment rate
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