Kovács, Olivér (2026) Global Case Study: The Mechanics, Evolution, and Policy Dilemmas of Zombification via WeWork and Flybe. ICEG EC Research Report. pp. 1-7.
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Abstract
This short paper examines the mechanics, systemic drivers, and policy dilemmas of corporate zombification through a comparative case study of WeWork in the United States and FlyBe in the United Kingdom. It analyses mature enterprises with an interest coverage ratio under 1 that are artificially sustained by cheap credit and financial aid rather than exiting through creative destruction. The study highlights how WeWork operated as a high-risk liability aggregator before its 2023 bankruptcy and how FlyBe survived a decade of structural unprofitability via private equity and government tax relief. Zombification is traced to ultra-loose monetary policy, political bailouts prioritizing short-term stability, and financialization-driven valuations. To resolve this, the paper advocates for normalizing monetary policy, reforming insolvency frameworks, and tying state support strictly to operational restructuring. Ultimately, clearing deadweight firms reallocates resources toward high-productivity enterprises while requiring safeguards against monopolistic market concentration.
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