Exploring the impact of sustainability components on financial performance: Evidence from the airline industry

Abstract

This study aims to examine the relationship between ESG disclosure scores, their components (E score, S score, and G score), CO? equivalent emissions, and airline profitability and market performance in the airline industry. Unlike much of the airline literature that predominantly examines profitability and ESG disclosure, this study extends the analysis by incorporating market performance and CO? equivalent emissions. The findings provide new insights into the role of sustainability factors in shaping financial outcomes in the airline industry. The analysis covers large-scale airlines during the period 2010–2022. Three models were developed: two measuring different dimensions of airline profitability and one focusing on market performance. Panel data methodology was applied using two-way fixed effects and random effects models. The application of these models accounts for unit- and time-specific heterogeneity, thereby helping to reduce omitted variable bias and improve the robustness of the empirical findings. The results reveal that ESG disclosure scores and CO? equivalent emissions positively affect airline profitability. However, governance score (G score) negatively influences airline market value, while CO? equivalent emissions show a positive relationship with it. © 2026 The Author(s