Covid-19's Impact On The Airline Industry In The US Stock Market Based on the Regression Model

ABSTRACT

In this paper, our group evaluates the effect of Covid-19 on the stock prices of the top 10 American airline companies and the NYSE Arca Airline Index using event study methodology. We accomplish this by comparing the Actual Returns and Expected Returns of an airline stock. We derive our Expected Return through a linear regression model between the airline stock returns and the market returns. We then subtract the Expected Return from the Actual Return to find the Abnormal Return. After that, we construct a confidence interval to test the significance of the Abnormal Return. If the Abnormal Return exceeds the confidence interval, we claim that Covid-19 had a significant effect on the stock price of our chosen Airlines. Our group's results showed that Covid-19 had a significant impact on the airline industry. We also looked at the impact of government-issued relief and mass vaccination, and we saw that airline stock prices recovered slowly but steadily. © 2021 IEEE.