Analysis of Investments
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American Airlines Group Inc. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Net Profit Margin since 2013
- Return on Assets (ROA) since 2013
- Current Ratio since 2013
- Price to Book Value (P/BV) since 2013
- Analysis of Revenues
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Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
American Airlines Group Inc., adjustment to net income (loss)
US$ in millions
| 12 months ended: | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|---|
| Net income (loss) (as reported) | ||||||
| Add: Investments | ||||||
| Net income (loss) (adjusted) |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Net Income Trends
- The company experienced a significant decline in net income from 2019 to 2020, shifting from a positive net income of approximately 1.7 billion US dollars to a substantial loss of nearly 8.9 billion US dollars. This sharp downturn highlights a period of severe financial stress, likely influenced by external adverse conditions.
- In 2021, the net loss narrowed considerably to just under 2 billion US dollars, indicating a partial recovery though still remaining in negative territory. This suggests some improvement in operational or market conditions compared to 2020.
- By 2022, the company returned to profitability, albeit with a modest net income of around 124 to 127 million US dollars. This marks a pivotal recovery phase and a positive turnaround in financial performance.
- The upward trend continued into 2023, with net income rising further to approximately 822 to 825 million US dollars, reflecting strengthening financial health and improved earnings capacity.
- Adjustment Comparison
- The adjusted net income figures closely mirror the reported net income across all periods, indicating that adjustments made for investment or other factors had minimal impact on the overall profitability reported.
- This alignment suggests that core business performance is suitably reflected in the reported results without significant distortion from adjustments.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
American Airlines Group Inc., adjusted profitability ratios
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Net Profit Margin Trends
- The reported and adjusted net profit margins exhibit a significant decline from 3.68% in 2019 to a substantial negative value of -51.25% in 2020. This sharp downturn is followed by a gradual recovery, with margins improving to -6.67% in 2021, slightly positive at 0.26% in 2022, and reaching 1.56% in 2023. The close alignment of reported and adjusted margins over the period indicates consistent adjustments reflecting similar results.
- Return on Assets (ROA) Patterns
- Reported and adjusted ROA follow a comparable trajectory to net profit margins. Starting at approximately 2.8% in 2019, ROA declines sharply to -14.33% in 2020. Subsequently, it recovers gradually over the next three years, reaching -3% in 2021, 0.2% in 2022, and 1.3% (reported) and 1.31% (adjusted) in 2023. The close mirroring of reported and adjusted ROA values suggests consistent financial adjustments across these years.
- Return on Equity (ROE) Data
- No data is provided for reported or adjusted ROE throughout the observed years, limiting the ability to analyze equity efficiency or shareholder returns directly.
- Overall Financial Performance Insights
- The data reveals a pronounced negative impact on profitability and asset efficiency starting in 2020, likely influenced by extraordinary external factors. Following this period, there is a clear trend of gradual recovery towards positive profitability and asset returns. By 2023, both net profit margin and ROA have reverted to positive territory, although not yet to pre-2019 levels. The consistency between reported and adjusted values suggests reliability and transparency in financial reporting adjustments.
American Airlines Group Inc., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
2023 Calculations
1 Net profit margin = 100 × Net income (loss) ÷ Operating revenues
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income (loss) ÷ Operating revenues
= 100 × ÷ =
- Net Income (Loss)
- The reported net income demonstrated significant volatility over the analyzed period. In 2019, there was a positive net income of $1,686 million. However, 2020 saw a dramatic reversal with a substantial loss of $8,885 million, reflecting an adverse impact on profitability likely related to extraordinary circumstances. The losses continued in 2021 but improved to a smaller negative figure of $1,993 million. In 2022, the company returned to profitability, although marginally, with a net income of $127 million. This upward trend continued in 2023, where net income increased to $822 million. The adjusted net income values mirror this pattern closely, indicating consistency in reported and adjusted figures over time.
- Net Profit Margin
- The reported net profit margin paralleled the net income developments. The margin was positive at 3.68% in 2019, sharply declined to a negative 51.25% in 2020, signaling substantial losses relative to revenue. Although still negative in 2021 at -6.67%, the margin showed notable recovery compared to the previous year. In 2022, the margin moved into positive territory at 0.26%, indicating a return to profitability, albeit minimal. By 2023, profitability further improved to a 1.56% margin. Adjusted net profit margins were nearly identical to the reported margins, underscoring the reliability of the adjusted figures in reflecting operational performance.
- Overall Trend and Insights
- The financial data reveal a significant impact on profitability during 2020, likely due to external disruptive factors that severely affected the company's financial performance. The subsequent years show a steady recovery trajectory, with profits and margins progressively improving toward pre-disruption levels. Both reported and adjusted figures consistently reflect this trend, indicating that adjustments did not materially alter the overall financial narrative. The improvement in 2022 and 2023 suggests effective management responses and a gradual normalization of business operations.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
2023 Calculations
1 ROE = 100 × Net income (loss) ÷ Stockholders’ deficit
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income (loss) ÷ Stockholders’ deficit
= 100 × ÷ =
- Net Income (Reported and Adjusted)
- The reported and adjusted net income figures exhibit a pronounced volatility over the five-year period. In 2019, the company recorded a positive net income of $1,686 million. However, in 2020, there was a significant downturn, with net income plunging to a loss of $8,885 million. This downward trend continued into 2021, though at a lesser magnitude, with losses amounting to $1,993 million. Recovery commenced from 2022 onwards, with marginal positive net income of $127 million reported in 2022, which further improved to $822 million in 2023.
- ROE (Reported and Adjusted)
- Return on equity metrics, both reported and adjusted, are unavailable for the entire timeframe, limiting the ability to evaluate shareholder equity efficiency and profitability trends directly from this measure.
- Summary
- The financial data indicates a severe impact on the company's profitability starting in 2020, likely due to extraordinary circumstances affecting the aviation industry during that period. The significant losses observed in 2020 and 2021 contrast sharply with the positive earnings before and after these years, reflecting a recovery trajectory beginning in 2022. The adjusted net income closely follows the reported figures, suggesting limited difference between reported and adjusted earnings in this context. The absence of ROE data restricts a deeper assessment of return relative to equity capital across these years.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
2023 Calculations
1 ROA = 100 × Net income (loss) ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income (loss) ÷ Total assets
= 100 × ÷ =
- Net Income
- The reported net income showed a significant decline from a profit of US$1,686 million in 2019 to a substantial loss of US$8,885 million in 2020. This sharp downturn is indicative of severe financial challenges during that period. In 2021, the net loss narrowed considerably to US$1,993 million, demonstrating some recovery. By 2022, the company returned to a marginal profit of US$127 million, further improving to US$822 million in 2023. The adjusted net income follows the same trend, confirming the consistency of the underlying financial performance.
- Return on Assets (ROA)
- The reported ROA aligns closely with the reported net income trend. It declined sharply from 2.81% in 2019 to -14.33% in 2020, reflecting the significant losses incurred. In 2021, ROA improved slightly to -3%, signaling ongoing recovery. The company achieved a slight positive ROA of 0.2% in 2022, which further increased to 1.3% in 2023. Adjusted ROA values mirror the reported figures very closely, further supporting the observed trend of recovery and gradual improvement in asset profitability.