Delta Air Lines Inc. (NYSE:DAL)

The analysis of the quarterly financial ratios reveals significant fluctuations over the observed periods, reflecting notable operational and financial leveraging changes.

Return on Assets (ROA)

The ROA exhibited a generally stable and moderately positive trend from early 2018 through 2019, with values ranging approximately between 6.34% and 7.42%. However, beginning in early 2020, a sharp decline is observed, with ROA turning negative and reaching its lowest points around -17.20% to -17.83% in late 2020 and early 2021. Subsequently, a recovery trend emerges, with the ROA moving back toward positive territory, reaching up to 0.8% by mid-2022. This pattern indicates significant operational challenges during 2020, followed by gradual improvement.

Financial Leverage

Financial leverage remained relatively stable from 2018 through 2019, fluctuating between approximately 4.0 and 4.8 times. Starting in early 2020, a dramatic increase is apparent, with financial leverage escalating sharply to 46.93, then peaking substantially at 151.62 in early 2021. After this peak, a reduction trend is noticeable, though leverage remains elevated compared to prior years, ranging from 18.64 to 24.66 times by mid-2022. This indicates a significant increase in debt relative to equity during the financial stress period, with some deleveraging thereafter.

Return on Equity (ROE)

The ROE showed solid performance within the 25% to 32% range from 2018 through 2019, demonstrating strong profitability on shareholder equity. However, the ratio experienced an extreme collapse starting in early 2020, plunging to negative values as severe as -2,702.9% at the beginning of 2021, reflecting massive losses and potentially negative equity or impairment effects. Following this trough, a substantial recovery trend is visible, with ROE improving back to positive figures around 15.74% by mid-2022. The extreme volatility underscores significant financial distress and recovery phases within the company.

In summary, the financial ratios collectively illustrate a period of stable profitability and leverage before 2020, followed by severe operational and financial disruption in 2020 and early 2021 marked by negative returns and heightened leverage. The subsequent partial normalization through 2022 suggests ongoing recovery efforts and improved operational conditions, albeit with leverage remaining elevated relative to pre-crisis levels.

Net Profit Margin

The net profit margin remained relatively stable and positive from early 2018 through the end of 2019, ranging between approximately 7.7% and 10.1%. However, beginning in the first quarter of 2020, a significant decline is observed, turning negative and reaching a trough of -102.96% by the first quarter of 2021. Subsequently, this metric exhibited a recovery trend, gradually improving to a small positive margin of around 1.4% by mid-2022.

Asset Turnover

The asset turnover ratio demonstrated minor fluctuations but generally exhibited a declining trend from 2018 through 2020, decreasing from around 0.78 to a low of 0.17 by the end of 2020. Starting in early 2021, there was a gradual improvement in asset turnover, rising steadily to 0.56 by mid-2022, indicating a slow recovery in the efficiency of asset utilization.

Financial Leverage

Financial leverage remained relatively stable and moderate from 2018 until early 2020, fluctuating between approximately 4.0 and 4.8. In 2020, there was a sharp and substantial increase in leverage, peaking dramatically at 151.62 by the first quarter of 2021. Following this peak, financial leverage decreased significantly but remained elevated compared to prior years, settling around 19.6 by mid-2022.

Return on Equity (ROE)

Return on equity exhibited consistently strong and positive returns from 2018 through 2019, generally above 25%. Similar to net profit margin and asset turnover, ROE experienced a severe downturn starting in early 2020, plunging into deeply negative territory with a nadir of -2702.9% in the first quarter of 2021. From this low point, ROE gradually recovered over the subsequent quarters, returning to positive figures near 15.7% by mid-2022.

Tax Burden

The tax burden ratio remained relatively stable from March 2018 through March 2020, with values consistently between 0.64 and 0.77, indicating a steady proportion of earnings retained after taxes. Data for mid-2020 to early 2021 is missing. In the periods with available data from early 2021 to mid-2022, the ratio shows a moderate decline, fluctuating between 0.62 and 0.73, suggesting some variability in tax efficiency during this recovery phase.

Interest Burden

This ratio remained steady around 0.93 to 0.95 from 2018 through Q1 2020, implying consistent impact of interest expenses on earnings before taxes. Data gaps exist for most of 2020 and early 2021. A notable fluctuation occurs starting late 2021, with negative and low positive values (-0.3 to 0.46), indicating high volatility or unusual interest expense patterns in this period.

EBIT Margin

EBIT margin showed a moderate downward trend from 14.05% in early 2018 to 10.95% by Q1 2020, reflecting some pressure on operating profitability. A sharp and severe decline is evident during 2020, with margins turning deeply negative and reaching a nadir of -120.79% by end-2020, consistent with significant operating losses. Recovery is observed starting 2021, with margins improving gradually but remaining low, stabilizing around 5% by mid-2022.

Asset Turnover

Asset turnover showed minor fluctuations near 0.73-0.8 in 2018 and 2019 but then declined significantly during 2020, hitting a low of 0.17 by early 2021. This decline reflects reduced efficiency in asset utilization amid pandemic-related disruptions. From mid-2021 onward, asset turnover shows consistent recovery, reaching 0.56 by mid-2022, indicating gradual improvement in generating revenue from assets.

Financial Leverage

Financial leverage was relatively stable between 4.0 and 4.8 from 2018 through early 2020, suggesting moderate use of debt relative to equity. Starting mid-2020, leverage increased dramatically, peaking at 151.62 by end-2020 amid crisis conditions, which signals substantial increases in debt or reductions in equity. Post-crisis data demonstrate a reduction in leverage, though levels remain elevated compared to the pre-pandemic period, fluctuating between approximately 18.6 and 27.9 during 2021 and early 2022.

Return on Equity (ROE)

ROE was consistently strong and positive from 2018 through Q1 2020, averaging around 25–32%. During 2020, ROE collapsed dramatically, turning severely negative with an extreme low of -2702.9% by end-2020, reflecting the compounded impact of large losses and elevated financial leverage. The subsequent period shows gradual recovery, with ROE moving back toward positive territory in 2021 and reaching approximately 15.7% by mid-2022, though still significantly below pre-pandemic levels.

Net Profit Margin

The net profit margin showed an overall positive trend from early 2018 through the end of 2019, generally hovering between approximately 7.7% to 10.1%. This indicates a period of relative profitability and operational efficiency. However, starting in the first quarter of 2020, a sharp decline occurred, reaching a significant negative low by the end of 2020 at around -72.45% to -102.96%. This downturn corresponds with a substantial loss period. Following this trough, gradual recovery is noted from early 2021 onwards, with net profit margin improving steadily but remaining low and below pre-2020 levels, stabilizing around 1.4% by mid-2022.

Asset Turnover

Asset turnover exhibited a modest decline from approximately 0.78 to 0.73 during 2018 and 2019, indicating a slight reduction in efficiency in generating revenue from assets. In 2020, there was a pronounced decline to as low as 0.17, reflecting diminished asset utilization likely due to operational disruptions. From 2021 through mid-2022, asset turnover progressively improved, reaching 0.56, which suggests a recovering ability to generate revenue from assets but still beneath the levels seen prior to 2020.

Return on Assets (ROA)

Return on assets followed a similar pattern to net profit margin. It maintained positive values between approximately 5.9% and 7.4% from 2018 through 2019, indicating solid returns relative to asset base. In 2020, ROA dropped sharply to negative territory, touching lows close to -17.8%. Starting in 2021, ROA experienced a gradual rebound, becoming marginally positive and improving to around 0.8% by mid-2022. This reflects a slow recovery in the company’s ability to generate profit from its assets post the downturn.

Tax Burden

The tax burden ratio showed a generally stable pattern from March 2018 through June 2019, fluctuating narrowly between 0.64 and 0.77. It remained steady around 0.75 to 0.77 until March 2020, after which data is missing for several quarters. In the most recent periods (March and June 2022), the ratio declined from 0.7 to 0.62, indicating a reduction in the proportion of income paid as tax.

Interest Burden

This ratio was consistently around 0.93 to 0.95 through December 2019, indicating relatively stable interest expenses relative to earnings before interest and taxes. However, from March 2021 onward, sharp fluctuations are noticeable, with a notable negative value (-0.3) occurring early in 2021, followed by a recovery to positive ratios around 0.24 to 0.46 by mid-2022. These swings suggest considerable volatility or restructuring related to interest costs during this period.

EBIT Margin

The EBIT margin exhibited a modest decline from a peak of 14.05% in March 2018 to about 13.83% by December 2019. Starting in March 2020, a steep and sustained deterioration is evident, plunging into large negative values, reaching as low as -120.79% in late 2020. The margin showed partial recovery in 2021 and 2022, however, it remained below pre-pandemic levels, stabilizing around 5% by mid-2022. This pattern indicates severe profitability challenges exacerbated during the pandemic period with only gradual improvement afterwards.

Asset Turnover

Asset turnover hovered close to 0.73 to 0.8 in the years prior to 2020, indicating consistent efficiency in generating sales from assets. A sharp decline is observed starting in early 2020, bottoming out at 0.17 in December 2020. Since then, a steady recovery trend is visible, with the ratio improving to 0.56 by June 2022. This suggests that asset utilization was significantly impaired during the pandemic but has been recovering progressively.

Return on Assets (ROA)

The ROA followed a generally positive trajectory from early 2018 until the end of 2019, remaining between 6% and 7.5%. It then experienced a sharp downturn starting March 2020, becoming negative through all of 2020 and into early 2021, reaching a low of -17.83%. Subsequently, the ROA began a gradual recovery from negative territory, approaching near-breakeven and slightly positive figures by mid-2022, though not reaching pre-pandemic levels. This reflects the impact of operational challenges on asset profitability, with improving trends in recent quarters.

Tax Burden

The tax burden ratio showed a generally stable pattern from early 2018 through early 2020, fluctuating between 0.64 and 0.77. However, there is a notable absence of data during much of 2020, possibly due to reporting interruptions. When data resumes in 2021 and 2022, the tax burden exhibits a slight downward trend, declining from 0.7 to 0.62 by mid-2022, indicating a decreasing proportion of income paid in taxes relative to pretax earnings in the most recent quarters.

Interest Burden

Interest burden remained consistently high and stable, around 0.93 to 0.95, from early 2018 until the start of 2020. Similar to the tax burden, data for interest burden is missing for several quarters in 2020 and early 2021. Conspicuously, a sharp negative value appears in the first reported quarter of 2021, likely an anomaly or reflecting an impairment or extraordinary accounting effect, followed by gradual normalization to positive values by mid-2022. This pattern suggests volatility in interest expenses or earnings before interest and taxes in the immediate post-pandemic period.

EBIT Margin

The EBIT margin displayed a declining trend from 14.05% in early 2018 to a still positive 10.95% in the first quarter of 2020. Subsequently, the margin experienced a severe and sustained contraction through 2020 and into early 2021, reaching extremely negative levels as low as -120.79%, indicative of significant operating losses likely tied to adverse market or operational conditions. From mid-2021 onward, the EBIT margin showed recovery signs, returning to positive territory around 5%, though still substantially below pre-2020 levels, suggesting the operating profitability is improving but has not fully recovered to historical norms.

Net Profit Margin

The net profit margin followed a similar trajectory to EBIT margin. It decreased steadily from 8.39% in early 2018 to 7.76% in early 2020, then plunged sharply into large negative values throughout 2020 and early 2021, mirroring the operating losses. The margin bottomed near -103% and showed a gradual improvement starting mid-2021, moving back toward break-even and achieving small positive margins of approximately 1.44% by mid-2022. This pattern indicates that while net profitability has significantly improved from its pandemic lows, it remains below historical profitability levels.