Financial distress, survival network design strategies, and airline pricing: An event study of a merger between a bankrupt FSC and an LCC in Brazil

Autor(es)

de Oliveira, Renan P. ^{[1, 2]} ; Oliveira, Alessandro V. M. ^[1]

Afiliação do(s) autor(es)

^[1] Aeronaut Inst Technol, Sao Jose Dos Campos - Brazil

^[2] Griffith Univ, Nathan, Qld - Australia

• Tipo de documento: Artigo Científico
• Fonte: JOURNAL OF AIR TRANSPORT MANAGEMENT; v. 92, MAY 2021.
• Citações Web of Science: 0

Resumo

This paper develops an event study to investigate the airfare effects of the bankruptcy of a financially distressed full-service carrier (FSC) and its subsequent acquisition by a low-cost carrier (LCC) in Brazil. We account for the distressed carrier?s survival network design strategies (SNDS) pursued during its reorganization?a suspected source of sample selection bias. Additionally, as rivals? pricing could be aimed at driving the distressed/bankrupt carrier out of the market, we treat the carrier?s distress as endogenously determined with it. Our results do not uncover any survival pricing behavior stemming from SNDS, but reveal fiercer price competition from rivals in periods preceding both the distressed carrier?s bankruptcy filing and acquisition. We also find evidence of enduring price competitiveness in the long run of the acquisition event, shedding light on the potential facili-tating role played by bankruptcy protection regulations in keeping and sustaining market contestability after the bankruptcy-filing period. (AU)

• Processo FAPESP: 13/14914-4 - Avaliação empírica dos impactos competitivos de regras regulatórias de redistribuição de slots em aeroportos
• Beneficiário: Alessandro Vinícius Marques de Oliveira
• Modalidade de apoio: Auxílio à Pesquisa - Regular
• Processo FAPESP: 15/19444-1 - Taxação de emissões de gases de companhias aéreas: modelagem econométrica para investigar seus potenciais efeitos sobre o transporte aéreo brasileiro
• Beneficiário: Alessandro Vinícius Marques de Oliveira
• Modalidade de apoio: Auxílio à Pesquisa - Regular