Comparative analysis of the financial and operational performance of full-service Turkish and German airline companies in light of the pandemic

Abstract

This study aimed to comparatively examine the financial and operational impacts of the COVID-19 pandemic on full-service airlines in the examples of Turkish Airlines (THY) and Lufthansa. Accordingly, the study sought to answer questions such as: how did the pandemic affect the financial and operational performance of the two airlines; which company performed more strongly in terms of post-crisis recovery dynamics; and what differences emerged in terms of liquidity, profitability, and operational resilience in the airlines under consideration. The study utilized a comparative case study along with financial statement analysis and ratio analysis approaches for financial and operational performance indicators. The hypotheses formulated in the study were: H1) The pandemic negatively impacted financial and operational performance; H2) THY was more successful than Lufthansa in post-COVID-19 pandemic recovery; H3) Lufthansa had stronger liquidity management; H4) The performance of the selected airlines showed parallelism in some indicators. This study utilized independent audit reports and activity reports from the sample companies for the period 2018–2022, analyzing companies' liquidity, activity, financial structure, and profitability ratios, along with operational indicators such as passenger volume, load factor, capacity utilization, and cargo performance. The study findings revealed that the pandemic caused significant performance losses for both airlines, but their recovery dynamics differed. Furthermore, the study indicated that THY demonstrated stronger performance in terms of operational recovery, profitability, and asset utilization efficiency, while Lufthansa showed a relative advantage in liquidity management and cash buffers. In other words, the findings showed that THY employed an operational resilience-based model and outperformed in profitability, efficiency, operational recovery, and lower leverage. On the other hand, Lufthansa was found to employ a liquidity-based resilience model and outperformed based on cash buffers, liquidity management, and cargo-weighted resilience. The study is limited to two countries, two airlines, the use of secondary data, selected financial and operational performance indicators, the period, and the comparative analysis method. Future studies involving a wider variety of countries, airlines, performance indicators, broader periods, and different analysis and decision-making methods could lead to more general conclusions.