Airline industry equities under external uncertainty shocks

We gauge the impact of news and other relevant external uncertainties facing airline firms via an equity market lens. Using local projections, we establish that rising investors’ fear shocks have long-lasting negative effects on airline industry equity returns, while increasing geopolitical, climate policy, and fuel cost uncertainties have comparatively short-lived impacts. Our results are robust to several alternative model specifications, including a pre-pandemic subsample. Based on our findings, we provide a promising avenue for future research in airline financial management. • External uncertainties facing airline firms are examined via an equity market lens. • Investors’ fear shocks have longer-lasting negative effects on the airline industry. • Geopolitical, climate policy, and fuel cost uncertainties have shorter-lived impacts.