With many companies such as airlines and retailers struggling during the pandemic, there’s a lot of focus on their short-term financial health. This is all laid out in corporate annual reports and quarterly announcements, describing carnage in the usual clinical financial terminology.
Ryanair’s latest trading statement is a good example, documenting a year-on-year decline in passenger traffic of 83% for the month of December. Load factor, which is a measure of how full the planes are, was down 22 percentage points compared to December 2019.
The stockholders, analysts and journalists who analyse reports like these aim to articulate the company’s financial performance so that those with a stake can gauge the risks to which they are potentially exposed. This includes everyone from employees to suppliers to those who hold shares and bonds in the company.
But while these questions about stakeholder risk are certainly important, there’s a bigger narrative about each company’s societal impact that often gets missed.
Airlines transport people and cargo, including mail, prescriptions, humanitarian food supplies and even the repatriated remains of people who have died. They are part of the lifeblood of our society, and their current deep financial distress has ramifications far beyond those with a direct interest.
Yet many members of the public seem to lack basic financial understanding, and it’s a problem around the world. As we shall see, this prevents us collectively from anticipating the potential human impact of companies in financial distress, and also from proactively advocating for more transparent information.
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