American Airlines Group Inc. (NASDAQ:AAL)

Debt to Capital Ratios

There is an observable increase in the debt to capital ratio from 1.00 in 2019 to a peak of 1.27 in 2020, followed by a slight decline to 1.19 in both 2022 and 2023. When including operating lease liabilities, the ratio follows a similar pattern, rising from 1.00 in 2019 to 1.20 in 2020, then gradually decreasing to 1.15 by 2023. This indicates a rise in overall leverage during 2020, with a partial deleveraging or stabilization in subsequent years.

Debt to Assets Ratios

The debt to assets ratio increases from 0.41 in 2019 to a high of 0.57 in 2021, then slightly decreases to 0.52 by 2023. When operating lease liabilities are included, the ratio starts at 0.56 in 2019, peaks at 0.69 in 2021, and then declines to 0.64 in 2023. The trend signifies increased debt relative to asset base around 2020-2021, with a modest reduction thereafter, hinting at efforts to manage asset financing and debt levels.

Interest Coverage Ratio

The interest coverage ratio shows a significant deterioration in 2020 and 2021, with a negative coverage of -8.33 and -0.42 respectively, indicating difficulties in covering interest expenses during these years. Improvement begins in 2022 with a positive coverage of 1.09, further rising to 1.52 in 2023. Although the ratio remains relatively low, this upward trend reflects ongoing recovery in the company’s ability to meet interest obligations.

Fixed Charge Coverage Ratio

Similarly to interest coverage, the fixed charge coverage ratio declines sharply from 1.72 in 2019 to -2.60 in 2020, revealing an inability to cover fixed charges at the height of financial stress. Recovery starts in 2021 with a partial positive coverage of 0.33, followed by gradual improvements to 1.05 in 2022 and 1.27 in 2023. The gradual upward movement points towards sustained efforts to stabilize fixed cost coverage.

Total debt

The total debt has shown a notable increase from 2019 to 2021, rising from 24,315 million US dollars to a peak of 38,060 million US dollars in 2021. In 2022 and 2023, the total debt levels declined to 35,663 million and 32,902 million US dollars respectively, indicating some degree of deleveraging following the peak period.

Stockholders’ deficit

The stockholders’ deficit has worsened significantly in 2020 and 2021, with large negative values recorded: -6,867 million and -7,340 million US dollars respectively. However, subsequent years demonstrate a gradual improvement, with the deficit reducing to -5,799 million in 2022 and further to -5,202 million in 2023, suggesting a recovery in the equity position.

Debt to equity ratio

There is no explicit data provided for the debt to equity ratio across the years. However, given the increasing total debt coupled with the negative and improving stockholders’ deficit, it can be inferred that the ratio was very high (due to negative equity) in the peak debt years and may have decreased somewhat in later years as the equity position improved and total debt declined.

The financial data reveals several noteworthy trends over the five-year period for American Airlines Group Inc. The total debt, including operating lease liabilities, exhibits an overall increasing trend from 2019 to 2021, rising from $33,444 million to $46,177 million. This increase appears to peak in 2021, followed by a gradual reduction in debt levels in 2022 and continuing into 2023, where debt declines to $40,663 million.

Stockholders’ deficit, a critical measure of financial health, shows a significant deterioration from 2019 through 2021, worsening from a slight deficit of $118 million in 2019 to a substantial deficit exceeding $7 billion in 2021. This indicates increasing negative equity, reflecting possibly accumulated losses or other equity reductions. After 2021, the deficit begins to improve moderately, decreasing to approximately $5.2 billion by the end of 2023, suggesting some stabilization or improvement in the company's equity position.

The absence of calculated values for the debt to equity ratio, despite the available debt and equity figures, limits the direct assessment of leverage trends on a relative basis. However, given the large negative equity values, this ratio might be problematic or not meaningful using standard definitions, which could explain the missing data.

Total Debt (Including Operating Lease Liability)

The overall debt level rises significantly until 2021, reflecting potential borrowing to manage operations or investments, followed by a gradual deleveraging phase from 2022 to 2023.

Stockholders’ Deficit

A substantial increase in deficit is observed from 2019 to 2021, indicating deteriorating equity likely due to operating losses or other factors impacting retained earnings. A partial recovery or reduction in deficit occurs in the last two years.

Debt to Equity Ratio

The absence of ratio calculations suggests challenges with the measure due to persistent negative equity, limiting its usefulness or reliability for this period.

Total Debt

The total debt increased substantially from 24,315 million USD in 2019 to a peak of 38,060 million USD in 2021. After this peak, it decreased gradually to 32,902 million USD by the end of 2023. This indicates an overall upward trend in borrowing over the first two years followed by a deleveraging phase in the subsequent years.

Total Capital

Total capital showed a generally increasing trend from 24,197 million USD in 2019 to 30,720 million USD in 2021, followed by a slight decline to 27,700 million USD in 2023. The initial growth might reflect capital infusions or retained earnings, while the later decline suggests possible capital reductions or asset value decreases.

Debt to Capital Ratio

The debt to capital ratio rose from 1 in 2019 to a high of 1.27 in 2020, reflecting an increase in leverage possibly due to debt uptake outpacing capital growth. After 2020, the ratio decreased gradually to 1.19 by 2022 and remained stable in 2023, indicating a moderate reduction in relative debt exposure and stabilization of capital structure.

Overall Insights

The company experienced a marked increase in leverage during the early part of the analyzed period, coinciding with a rise in total debt that outpaced capital growth. From 2021 onwards, there is a trend toward deleveraging and capital stabilization, with declining total debt and a more balanced debt to capital ratio. This shift may reflect strategic financial management aimed at reducing financial risk and improving the capital base. Despite fluctuations, the debt to capital ratio remains above 1 throughout, signifying consistent use of debt financing relative to capital.

The financial data indicates fluctuations in the company's debt and capital structure over the five-year span from 2019 to 2023.

Total Debt (Including Operating Lease Liability)

The total debt increased significantly from 33,444 million USD at the end of 2019 to a peak of 46,177 million USD by the end of 2021. This represents an approximate 38% rise over two years. Subsequently, debt levels decreased gradually to 40,663 million USD by the end of 2023, reflecting a reduction of about 12% from the 2021 peak.

Total Capital (Including Operating Lease Liability)

Total capital exhibited a modest upward trend from 33,326 million USD in 2019 to 38,837 million USD in 2021. Following this, a decline was observed, with total capital decreasing to 35,461 million USD by the end of 2023. Overall, total capital increased by about 6% between 2019 and 2023, despite the drop after 2021.

Debt to Capital Ratio (Including Operating Lease Liability)

The debt to capital ratio indicates the proportion of debt financing relative to total capital. Starting at a ratio of 1.0 in 2019, the ratio increased to approximately 1.20 by 2020 and remained relatively stable around 1.15 to 1.19 during the subsequent years. This implies that debt consistently exceeded total capital throughout the period, with a peak leverage point in 2020 and 2021 followed by a slight deleveraging by 2023.

Overall, the data reflects a period of increased leverage and capital buildup through 2021, followed by a gradual reduction in debt and capital base through 2023. The elevated debt to capital ratio above unity throughout the period suggests reliance on debt financing in excess of total capital, which may point to strategic borrowing or capital structure adjustments over these years.

Total Debt

There is a notable increase in total debt from 2019 to 2021, rising from 24,315 million US$ to a peak of 38,060 million US$. Following this peak, total debt declines gradually through 2022 and 2023, reaching 32,902 million US$.

Total Assets

Total assets exhibit a steady upward trend from 59,995 million US$ in 2019 to a maximum of 66,467 million US$ in 2021. After this peak, total assets slightly decrease over the subsequent two years, ending at 63,058 million US$ by the end of 2023.

Debt to Assets Ratio

The debt to assets ratio increases significantly from 0.41 in 2019 to 0.57 in 2021, reflecting a higher leverage position. Subsequently, this ratio decreases moderately in 2022 and 2023, settling at 0.52, which suggests a partial deleveraging but still maintains a relatively elevated leverage compared to 2019.

The financial data reveals notable trends in the company's leverage and asset base over the five-year period from 2019 to 2023.

Total debt (including operating lease liability)

The total debt increased significantly from 33,444 million US dollars in 2019 to a peak of 46,177 million US dollars in 2021. Subsequently, the debt level declined to 43,687 million in 2022 and further to 40,663 million by the end of 2023. This pattern indicates an initial phase of debt accumulation followed by a gradual deleveraging or repayment trend in the last two years.

Total assets

Total assets showed a steady upward movement from 59,995 million US dollars in 2019 to 66,467 million in 2021. After reaching this peak, there was a mild contraction to 64,716 million in 2022 and further to 63,058 million in 2023. This suggests some asset reduction or revaluation occurring post-2021, which may be associated with the overall business adjustments.

Debt to assets ratio (including operating lease liability)

The debt to assets ratio rose from 0.56 in 2019 to 0.69 in 2021, reflecting an increased reliance on debt relative to the asset base. Following this peak, the ratio decreased to 0.68 in 2022 and then to 0.64 in 2023. While still elevated compared to 2019, this decline indicates an improvement in the capital structure or better asset coverage against liabilities in recent years.

Overall, the data portrays a period of financial stress or expansion through increased debt until 2021, with subsequent efforts to reduce debt levels and slightly contract the asset base. The decreasing debt to assets ratio after 2021 suggests progress towards a more balanced leverage position.

Total assets (US$ in millions)

The total assets exhibit a gradual increase from 59,995 million in 2019 to a peak of 66,467 million in 2021, followed by a slight decline reaching 63,058 million by the end of 2023. This trend indicates a growth phase until 2021, after which the company experienced a mild contraction in its asset base.

Stockholders’ deficit (US$ in millions)

The stockholders’ deficit has notably worsened from a relatively minor deficit of -118 million in 2019 to a substantial deficit of -6,867 million in 2020. This negative trend continues marginally worsening to -7,340 million in 2021, then improving somewhat to -5,799 million in 2022 and further to -5,202 million in 2023. This pattern suggests significant financial strain during 2020 and 2021, likely linked to external disruptive factors, with an initial recovery phase starting in 2022.

Financial leverage (ratio)

No data is available for financial leverage across the periods, limiting the ability to assess the company's capital structure risks or use of debt financing.

Earnings before interest and tax (EBIT)

The EBIT exhibited significant volatility over the analyzed period. Starting at a positive value of 3351 million USD in 2019, it declined sharply to a negative figure of -10226 million USD in 2020, reflecting a substantial operational challenge or external impact. There was a partial recovery in 2021 with EBIT improving to -748 million USD, followed by a return to positive territory in 2022 at 2148 million USD. The upward trend continued into 2023, reaching 3266 million USD, indicating a consistent operational recovery and improved profitability.

Interest expense, net

Net interest expense showed a steady upward trend throughout the period. Starting at 1095 million USD in 2019, the expense increased each year, reaching 2145 million USD by 2023. This rise suggests growing debt levels or higher financing costs over time.

Interest coverage ratio

The interest coverage ratio reflected considerable fluctuations, mirroring the volatility in EBIT. In 2019, the ratio was healthy at 3.06, indicating adequate earnings to cover interest expenses. The ratio turned negative in 2020 and 2021 (-8.33 and -0.42 respectively), highlighting earnings insufficient to cover interest costs during those years. Improvement occurred in 2022 with a positive ratio of 1.09, further rising to 1.52 in 2023. Despite recovery, the ratio remains relatively low, signaling modest capacity to meet interest obligations compared to 2019.

Earnings before fixed charges and tax

The earnings exhibited significant volatility over the analyzed periods. Initially, there was a strong positive figure of 5,378 million US dollars at the end of 2019, which sharply declined to a negative value of -8,269 million in 2020. This negative result indicates a substantial downturn, likely influenced by extraordinary circumstances. The company demonstrated recovery in subsequent years, with earnings increasing to 1,264 million in 2021, further rising to 4,155 million in 2022, and reaching 5,282 million by the end of 2023. The trend from 2021 onwards reflects a steady improvement and a near return to pre-2019 earnings levels.

Fixed charges

Fixed charges showed a consistent upward trajectory throughout the period. Starting at 3,122 million US dollars in 2019, these charges increased moderately each year, reaching 3,184 million in 2020 and continuing to rise to 3,812 million in 2021, 3,969 million in 2022, and 4,161 million in 2023. This gradual increase in fixed obligations may put additional pressure on profitability, especially in periods of earnings volatility.

Fixed charge coverage ratio

The fixed charge coverage ratio, which measures the ability to cover fixed charges with earnings before interest and taxes, mirrored the earnings pattern. The ratio started at a healthy level of 1.72 in 2019, indicating sufficient coverage of fixed charges. However, it plunged dramatically to -2.6 in 2020, reflecting earnings insufficiency and potential distress. Recovery began in 2021 with a low positive ratio of 0.33, improving to 1.05 in 2022, and further to 1.27 in 2023. Despite the improvement, the coverage ratio in 2023 remains below the initial 2019 level, suggesting that while the company has regained much of its earnings capacity, fixed charge coverage is still somewhat constrained relative to pre-2020 performance.