How working capital management affects financial sustainability in airline groups centered in the European market

Air transport has become the dominant mode of passenger mobility worldwide, yet airline groups remain highly vulnerable to financial distress because of volatile demand, high fixed costs, and exposure to systemic shocks. This study examines how working capital management and financial structure influence financial sustainability in major European-centered airline groups with extensive international operations, measured by operating cash flow relative to total assets and interest coverage ratios. Using panel data from 2010 to 2024, the analysis explores how these relationships vary across business models, liquidity conditions, and crisis periods such as the COVID-19 pandemic. The results show that leverage is the most consistent determinant of financial sustainability, while changes in the cash conversion cycle play a limited role in stable periods but become critical during crises, when longer operating cycles significantly weaken debt-servicing capacity. Substantial heterogeneity emerges between low-cost and full-service carriers, with the effects of working capital management also varying according to firms’ liquidity conditions. These findings contribute new evidence on the financial resilience of airline groups operating in Europe and provide policy-relevant guidance for managers and regulators seeking to strengthen stability in air transport markets.