Stock Analysis on Net

American Airlines Group Inc. (NASDAQ:AAL)

This company has been moved to the archive! The financial data has not been updated since February 21, 2024.

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

American Airlines Group Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net operating profit after taxes (NOPAT)1 2,815 2,040 (736) (10,143) 3,350
Cost of capital2 7.76% 7.67% 6.79% 7.12% 7.20%
Invested capital3 30,476 30,859 29,074 31,408 35,495
 
Economic profit4 449 (328) (2,710) (12,381) 793

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).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,8157.76% × 30,476 = 449

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. American Airlines Group Inc. economic profit increased from 2021 to 2022 and from 2022 to 2023.

Net Operating Profit after Taxes (NOPAT)

American Airlines Group Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net income (loss) 822 127 (1,993) (8,885) 1,686
Deferred income tax expense (benefit)1 299 65 (555) (2,568) 560
Increase (decrease) in equity equivalents2 299 65 (555) (2,568) 560
Interest expense, net 2,145 1,962 1,800 1,227 1,095
Interest expense, operating lease liability3 590 594 511 472 429
Adjusted interest expense, net 2,735 2,556 2,311 1,699 1,524
Tax benefit of interest expense, net4 (574) (537) (485) (357) (320)
Adjusted interest expense, net, after taxes5 2,161 2,019 1,826 1,342 1,204
Interest income (591) (216) (18) (41) (127)
Investment income, before taxes (591) (216) (18) (41) (127)
Tax expense (benefit) of investment income6 124 45 4 9 27
Investment income, after taxes7 (467) (171) (14) (32) (100)
Net operating profit after taxes (NOPAT) 2,815 2,040 (736) (10,143) 3,350

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).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in equity equivalents to net income (loss).

3 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 7,761 × 7.60% = 590

4 2023 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 2,735 × 21.00% = 574

5 Addition of after taxes interest expense to net income (loss).

6 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 591 × 21.00% = 124

7 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. American Airlines Group Inc. NOPAT increased from 2021 to 2022 and from 2022 to 2023.

Cash Operating Taxes

American Airlines Group Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Income tax provision (benefit) 299 59 (555) (2,568) 570
Less: Deferred income tax expense (benefit) 299 65 (555) (2,568) 560
Add: Tax savings from interest expense, net 574 537 485 357 320
Less: Tax imposed on investment income 124 45 4 9 27
Cash operating taxes 450 485 482 348 303

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).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. American Airlines Group Inc. cash operating taxes increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Invested Capital

American Airlines Group Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Current maturities of long-term debt and finance leases 3,632 3,274 2,489 2,797 2,861
Long-term debt and finance leases, net of current maturities 29,270 32,389 35,571 29,796 21,454
Operating lease liability1 7,761 8,024 8,117 8,428 9,129
Total reported debt & leases 40,663 43,687 46,177 41,021 33,444
Stockholders’ deficit (5,202) (5,799) (7,340) (6,867) (118)
Net deferred tax (assets) liabilities2 (2,879) (3,089) (3,547) (3,230) (616)
Equity equivalents3 (2,879) (3,089) (3,547) (3,230) (616)
Accumulated other comprehensive (income) loss, net of tax4 4,894 4,585 5,942 7,103 6,331
Adjusted stockholders’ deficit (3,187) (4,303) (4,945) (2,994) 5,597
Short-term investments5 (7,000) (8,525) (12,158) (6,619) (3,546)
Invested capital 30,476 30,859 29,074 31,408 35,495

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).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of equity equivalents to stockholders’ deficit.

4 Removal of accumulated other comprehensive income.

5 Subtraction of short-term investments.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. American Airlines Group Inc. invested capital increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Cost of Capital

American Airlines Group Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 9,684 9,684 ÷ 50,261 = 0.19 0.19 × 18.15% = 3.50%
Long-term debt and finance lease liabilities, including current maturities3 32,816 32,816 ÷ 50,261 = 0.65 0.65 × 6.47% × (1 – 21.00%) = 3.34%
Operating lease liability4 7,761 7,761 ÷ 50,261 = 0.15 0.15 × 7.60% × (1 – 21.00%) = 0.93%
Total: 50,261 1.00 7.76%

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and finance lease liabilities, including current maturities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 10,136 10,136 ÷ 51,490 = 0.20 0.20 × 18.15% = 3.57%
Long-term debt and finance lease liabilities, including current maturities3 33,330 33,330 ÷ 51,490 = 0.65 0.65 × 6.24% × (1 – 21.00%) = 3.19%
Operating lease liability4 8,024 8,024 ÷ 51,490 = 0.16 0.16 × 7.40% × (1 – 21.00%) = 0.91%
Total: 51,490 1.00 7.67%

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and finance lease liabilities, including current maturities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 11,315 11,315 ÷ 58,736 = 0.19 0.19 × 18.15% = 3.50%
Long-term debt and finance lease liabilities, including current maturities3 39,304 39,304 ÷ 58,736 = 0.67 0.67 × 4.93% × (1 – 21.00%) = 2.61%
Operating lease liability4 8,117 8,117 ÷ 58,736 = 0.14 0.14 × 6.30% × (1 – 21.00%) = 0.69%
Total: 58,736 1.00 6.79%

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and finance lease liabilities, including current maturities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 11,508 11,508 ÷ 50,962 = 0.23 0.23 × 18.15% = 4.10%
Long-term debt and finance lease liabilities, including current maturities3 31,026 31,026 ÷ 50,962 = 0.61 0.61 × 4.77% × (1 – 21.00%) = 2.29%
Operating lease liability4 8,428 8,428 ÷ 50,962 = 0.17 0.17 × 5.60% × (1 – 21.00%) = 0.73%
Total: 50,962 1.00 7.12%

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and finance lease liabilities, including current maturities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 12,070 12,070 ÷ 46,377 = 0.26 0.26 × 18.15% = 4.72%
Long-term debt and finance lease liabilities, including current maturities3 25,178 25,178 ÷ 46,377 = 0.54 0.54 × 4.08% × (1 – 21.00%) = 1.75%
Operating lease liability4 9,129 9,129 ÷ 46,377 = 0.20 0.20 × 4.70% × (1 – 21.00%) = 0.73%
Total: 46,377 1.00 7.20%

Based on: 10-K (reporting date: 2019-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and finance lease liabilities, including current maturities. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

American Airlines Group Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit1 449 (328) (2,710) (12,381) 793
Invested capital2 30,476 30,859 29,074 31,408 35,495
Performance Ratio
Economic spread ratio3 1.47% -1.06% -9.32% -39.42% 2.23%
Benchmarks
Economic Spread Ratio, Competitors4
FedEx Corp. -3.59% -3.36% -0.55% -5.57% -8.20%
Uber Technologies Inc. -0.33% -70.57% -19.75% -46.86% -55.38%
Union Pacific Corp. -0.54% 1.29% 0.45% -1.14% 0.26%
United Parcel Service Inc. 4.67% 15.86% 21.64% -8.48% 2.95%

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).

1 Economic profit. See details »

2 Invested capital. See details »

3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 449 ÷ 30,476 = 1.47%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. American Airlines Group Inc. economic spread ratio improved from 2021 to 2022 and from 2022 to 2023.

Economic Profit Margin

American Airlines Group Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit1 449 (328) (2,710) (12,381) 793
Operating revenues 52,788 48,971 29,882 17,337 45,768
Performance Ratio
Economic profit margin2 0.85% -0.67% -9.07% -71.41% 1.73%
Benchmarks
Economic Profit Margin, Competitors3
FedEx Corp. -2.77% -2.39% -0.42% -4.63% -6.24%
Uber Technologies Inc. -0.14% -36.17% -18.19% -88.50% -80.13%
Union Pacific Corp. -1.37% 3.09% 1.20% -3.40% 0.69%
United Parcel Service Inc. 2.33% 7.08% 9.87% -3.32% 1.45%

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).

1 Economic profit. See details »

2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Operating revenues
= 100 × 449 ÷ 52,788 = 0.85%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. American Airlines Group Inc. economic profit margin improved from 2021 to 2022 and from 2022 to 2023.