BEYOND THE BALANCE SHEET: EVIDENCE FROM A FIXED-EFFECTS PANEL ANALYSIS OF THE BIG FOUR U.S. CARRIERS

Abstract

This study examines the financial and operational determinants of brand value in the U.S. airline industry using a balanced panel of the four major carriers (Delta, American, United, and Southwest) over 2014–2024. Employing Fixed-Effects estimation with cluster-robust standard errors and two approaches to address multicollinearity, eight model specifications yield consistent primary findings. Total assets emerge as the dominant predictor of brand value (elasticity: 0.78–2.72), supporting a scale-brand nexus grounded in the resource-based view. Long-term debt consistently depresses brand value (elasticity: −0.70 to −0.87), establishing a leverage-brand penalty relevant to capital structure decisions. Advertising expenditure enters positively in all ratio-based models, offering directional support for the advertising-brand equity hypothesis, though significance is limited by the small number of clusters. The orthogonalization strategy shows excess capacity as a positive, significant predictor, consistent with premium carriers sustaining brand equity through network breadth. Operating income enters negatively across both strategies, suggesting a within-firm profit-brand trade-off. The COVID-19 pandemic exerted a residual negative brand impact of roughly 30%, though marginally significant. Overall, publicly available financial and operational metrics can meaningfully explain brand value dynamics in regulated industries.