Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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American Airlines Group Inc. pages available for free this week:
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Return on Assets (ROA) since 2013
- Current Ratio since 2013
- Price to Operating Profit (P/OP) since 2013
- Price to Book Value (P/BV) since 2013
- Analysis of Debt
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Return on Invested Capital (ROIC)
American Airlines Group Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| United Parcel Service Inc. | ||||||
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 Invested capital. See details »
3 2023 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT experienced a significant decline in 2020, moving from a positive 3,350 million USD in 2019 to a substantial loss of 10,143 million USD. This negative trend continued in 2021, though the loss reduced to 736 million USD. Recovery began in 2022, with NOPAT returning to positive territory at 2,040 million USD, and further improved to 2,815 million USD in 2023. The data indicates a sharp impact in 2020 with gradual stabilization and improvement over the next two years.
- Invested Capital
- Invested capital showed a downward trend from 35,495 million USD in 2019 to 29,074 million USD in 2021, indicating possible asset reductions or divestments during this period. In 2022, invested capital increased slightly to 30,859 million USD, but decreased again marginally to 30,476 million USD in 2023. Overall, the invested capital decreased by approximately 14% from 2019 to 2023, reflecting a contraction in the capital base.
- Return on Invested Capital (ROIC)
- ROIC was positive and strong at 9.44% in 2019 before experiencing a sharp decline to a negative 32.29% in 2020, consistent with the large operating losses recorded that year. It remained slightly negative at -2.53% in 2021, then improved to 6.61% in 2022, and further increased to 9.24% in 2023. The trend demonstrates a substantial deterioration in capital efficiency during 2020 and 2021, followed by a notable recovery toward pre-2020 performance levels by 2023.
Decomposition of ROIC
American Airlines Group Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × |
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating Profit Margin (OPM)
- The operating profit margin experienced significant volatility over the analyzed periods. Initially, in 2019, the margin was positive at 7.98%, indicating profitable core operations. However, there was a sharp decline in 2020, plummeting to -56.5%, reflecting substantial operational challenges. The margin slightly improved to -0.85% in 2021 but remained negative, signaling ongoing difficulties. Recovery was more pronounced in 2022 and 2023, with margins rising to 5.16% and 6.18% respectively, suggesting a return to operational profitability approaching pre-2019 levels.
- Turnover of Capital (TO)
- Capital turnover demonstrated a downward shift in 2020, falling from 1.29 to 0.55, indicating less efficient use of capital during that sector’s downturn. From 2021 onwards, there was a clear trend of improvement, with values increasing to 1.03 in 2021, 1.59 in 2022, and reaching 1.73 in 2023. This upward trajectory suggests enhanced asset utilization and operational efficiency recovery over time.
- 1 – Effective Cash Tax Rate (CTR)
- The metric representing one minus the effective cash tax rate shows a consistently high value at the start, with 91.7% in 2019 and a peak of 100% in 2020 and 2021, implying minimal cash tax payments during these periods. This proportion declined somewhat in 2022 to 80.78% and increased again to 86.21% in 2023. These fluctuations indicate variability in taxable income and tax planning outcomes, with particularly high cash tax shields or losses recorded during the crisis years.
- Return on Invested Capital (ROIC)
- ROIC mirrored similar volatility to operating margin, showing positive performance at 9.44% in 2019. The metric turned sharply negative in 2020 to -32.29% and remained below zero in 2021 at -2.53%, reflecting significant capital inefficiencies and losses during this period. From 2022 the return rose back into positive territory at 6.61% and further to 9.24% in 2023, signaling recovery in capital profitability and effective use of invested resources in the latter years.
Operating Profit Margin (OPM)
American Airlines Group Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Operating revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| United Parcel Service Inc. | ||||||
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 Cash operating taxes. See details »
3 2023 Calculation
OPM = 100 × NOPBT ÷ Operating revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net operating profit before taxes (NOPBT)
- The net operating profit before taxes exhibited significant volatility over the analyzed period. It started positively in 2019 with a value of $3,653 million but sharply declined to a negative $9,795 million in 2020, indicating substantial operating losses likely due to extraordinary factors impacting the business environment. In 2021, the loss decreased considerably to $255 million, showing a recovery trend. By 2022 and 2023, the company returned to profitability with NOPBT values of $2,526 million and $3,265 million respectively, surpassing the 2019 pre-pandemic level by the latest year.
- Operating revenues
- Operating revenues experienced a steep decline in 2020, dropping to $17,337 million from $45,768 million in 2019, representing a substantial reduction likely caused by adverse market conditions. Revenue steadily improved in 2021, reaching $29,882 million, followed by a strong rebound in 2022 to $48,971 million, which nearly recovered to 2019 levels. The upward trend continued into 2023 with revenues increasing further to $52,788 million, indicating robust business growth and market recovery.
- Operating profit margin (OPM)
- The operating profit margin underwent dramatic fluctuations, starting at a healthy 7.98% in 2019 before plunging to -56.5% in 2020, reflecting severe operational losses during that year. In 2021, the margin remained close to break-even at -0.85%, indicating ongoing challenges but significant improvement. Positive margins resumed in 2022 at 5.16%, followed by a further increase to 6.18% in 2023, suggesting improvements in cost management and operational efficiency alongside revenue gains.
Turnover of Capital (TO)
American Airlines Group Inc., TO calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| United Parcel Service Inc. | ||||||
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 Invested capital. See details »
2 2023 Calculation
TO = Operating revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Operating Revenues
- Operating revenues experienced significant fluctuations over the analyzed period. There was a steep decline from US$45,768 million in 2019 to US$17,337 million in 2020, reflecting a substantial reduction likely caused by external challenges during that year. Subsequently, revenue rebounded to US$29,882 million in 2021 and continued to recover strongly, reaching US$48,971 million in 2022 and further increasing to US$52,788 million in 2023. Overall, the data show a marked recovery trajectory after the sharp downturn in 2020.
- Invested Capital
- Invested capital exhibited a gradual downward trend from US$35,495 million in 2019 to US$31,408 million in 2020, and continued to decline to US$29,074 million in 2021. A slight rebound was observed in 2022, increasing to US$30,859 million, but this was followed by a minor decrease to US$30,476 million in 2023. The overall pattern indicates a moderate contraction in invested capital over the five-year period, with stabilization occurring in the last two years.
- Turnover of Capital (TO)
- The turnover of capital ratio reflects efficiency in utilizing invested capital to generate operating revenues. This ratio decreased sharply from 1.29 in 2019 to 0.55 in 2020, consistent with the decline in revenues and reduced operational intensity during that year. Thereafter, an improving trend is observed, with the ratio rising to 1.03 in 2021, 1.59 in 2022, and reaching 1.73 in 2023. This gradual increase demonstrates a strengthening ability to generate higher revenues per unit of invested capital, surpassing the pre-2019 level by the end of the period.
Effective Cash Tax Rate (CTR)
American Airlines Group Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| United Parcel Service Inc. | ||||||
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 Cash operating taxes. See details »
3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash operating taxes
- The cash operating taxes exhibit an increasing trend from 2019 to 2022. Starting at $303 million in 2019, the amount rises to $348 million in 2020, then further increases significantly to $482 million in 2021, peaking at $485 million in 2022 before slightly decreasing to $450 million in 2023. This pattern suggests growing tax expenses up until 2022 with a modest reduction in the subsequent year.
- Net operating profit before taxes (NOPBT)
- The net operating profit before taxes shows substantial volatility over the period. The figure is positive at $3,653 million in 2019 but sharply declines to a significant loss of $9,795 million in 2020. In 2021, the loss narrows considerably to $255 million but remains negative. Recovery begins in 2022 with a positive NOPBT of $2,526 million, improving further to $3,265 million in 2023. The data indicates a severe impact, likely due to external shocks in 2020, followed by progressive recovery over the next two years.
- Effective cash tax rate (CTR)
- The effective cash tax rate has limited data points. It was 8.3% in 2019, with missing information for 2020 and 2021. For 2022 and 2023, the rate is 19.22% and 13.79%, respectively, indicating an increase in the tax rate in 2022 followed by a decrease in 2023. This variance may correspond with fluctuations in profitability and taxable income levels during these years.