American Airlines Group Inc. (NASDAQ:AAL)

Return on Assets (ROA)

The Return on Assets (ROA) displays significant volatility across the observed periods. In 2019, the ROA was positive at 2.81%, indicating a moderate level of profitability relative to the company's asset base. However, this metric experienced a sharp decline in 2020 to -14.33%, reflecting a substantial loss in asset profitability during that year. In 2021, the ROA remained negative at -3%, showing continued challenges in generating returns from assets, though the loss was less severe than in 2020. The metric turned positive again in 2022 with a marginal 0.2%, suggesting a recovery phase, albeit modest. By 2023, the ROA further improved to 1.3%, indicating ongoing progress in asset utilization and profitability.

Financial Leverage

No data was provided for financial leverage in the observed periods, preventing analysis of the company’s capital structure and its impact on financial performance.

Return on Equity (ROE)

Return on Equity data is absent throughout the timeline, limiting insight into shareholder profitability and the effectiveness of equity financing.

The analysis of the annual financial indicators reveals several notable trends over the five-year period.

Net Profit Margin

There is a significant decline in net profit margin from 3.68% in 2019 to a substantial negative value of -51.25% in 2020, indicating a severe loss during that year. This negative margin slightly improves to -6.67% in 2021 but remains negative, highlighting ongoing profitability challenges. A transition to marginal profitability occurs in 2022 with a near neutral margin of 0.26%, followed by further improvement to 1.56% in 2023. This trend suggests a recovery trajectory toward profitability after a period of distress likely tied to external market or operational disruptions.

Asset Turnover

Asset turnover shows a sharp decline from 0.76 in 2019 to 0.28 in 2020, indicating reduced efficiency in utilizing assets to generate sales, which coincides with the period of significant loss observed in net profit margin. From 2020 onwards, asset turnover improves steadily to 0.45 in 2021, reaching the original level of 0.76 in 2022, and increasing further to 0.84 in 2023. This upward trend indicates enhanced operational efficiency and stronger asset utilization over time.

Financial Leverage and Return on Equity (ROE)

No data is available for financial leverage and return on equity across the examined time frame, preventing any analysis or insights regarding these metrics.

Overall, the data reflects a significant downturn in 2020, followed by a gradual recovery in both profitability and operational efficiency metrics, although net profit margins remain lower than pre-2020 levels. The improvement in asset turnover beyond historical levels by 2023 indicates positive momentum in asset usage efficiency.

Tax Burden

The tax burden ratio showed a minor fluctuation over the examined years. It started at 0.75 in 2019, decreased to 0.68 in 2022, and then returned close to the initial level with a value of 0.73 in 2023. The absence of data for 2020 and 2021 limits a full trend assessment, but recent figures suggest relative stability in the company’s effective tax rate.

Interest Burden

The interest burden ratio experienced a significant decline from 0.67 in 2019 to 0.09 in 2021, indicating a substantial increase in interest expenses relative to operating income during this period. However, there was a recovery trend observed in 2022 and 2023 with the ratio increasing to 0.34, suggesting an improvement in the company's ability to cover interest expenses from its operational earnings.

EBIT Margin

The EBIT margin displayed considerable volatility and recovery over the period. It was positive at 7.32% in 2019, then dropped sharply to -58.98% in 2020, reflecting severe operating losses, likely due to extraordinary circumstances. The margin remained negative but improved to -2.5% in 2021. Subsequently, profitability returned in 2022 and 2023 with margins rising to 4.39% and 6.19%, indicating a gradual restoration of operational efficiency and profitability.

Asset Turnover

Asset turnover followed a U-shaped trend. It declined markedly from 0.76 in 2019 to 0.28 in 2020, suggesting decreased efficiency in using assets to generate revenue during that year. The ratio then recovered steadily to 0.45 in 2021, 0.76 in 2022, and further to 0.84 in 2023, surpassing the initial pre-2020 level. This pattern may reflect recovery in asset utilization aligned with improved operating conditions.

Financial Leverage and Return on Equity (ROE)

Data for financial leverage and return on equity are missing across the presented periods, precluding any analysis or conclusions about changes in the company’s capital structure or profitability from shareholders’ equity.

Net Profit Margin

The net profit margin displayed a significant decline from 3.68% in 2019 to -51.25% in 2020, indicating a substantial loss likely linked to extraordinary or external factors affecting profitability. In the subsequent years, the margin showed gradual recovery, improving to -6.67% in 2021, then crossing into positive territory at 0.26% in 2022 and further increasing to 1.56% in 2023. This trend reflects an ongoing but gradual restoration of profitability after the sharp downturn in 2020.

Asset Turnover

The asset turnover ratio experienced a notable drop from 0.76 in 2019 to 0.28 in 2020, signifying a marked reduction in efficiency in generating revenue from assets during that period. Recovery began in 2021 with the ratio rising to 0.45 and continued strengthening to 0.76 in 2022, returning to the 2019 level. In 2023, the ratio further increased to 0.84, suggesting an improvement in asset utilization beyond the pre-2020 performance.

Return on Assets (ROA)

Return on assets sharply decreased from 2.81% in 2019 to -14.33% in 2020, pointing to significant losses and diminished asset profitability during that year. Subsequent years showed a slow rebound: -3.00% in 2021, 0.20% in 2022, and 1.30% in 2023. The gradual positive trend indicates a recovery trajectory, though the ROA in 2023 remains below the 2019 level, signifying room for further improvement in asset efficiency and profitability.

Tax Burden

The tax burden ratio shows a decrease from 0.75 in 2019 to 0.68 in 2022, followed by a rebound to 0.73 in 2023. This indicates some fluctuation in the effective tax rate impacting profit after tax over the observed period.

Interest Burden

The interest burden ratio exhibits a significant decline from 0.67 in 2019 to 0.09 in 2021, suggesting greater interest expenses relative to earnings before interest and taxes during this period. It then increases to 0.34 in 2023, indicating some improvement but remaining below 2019 levels.

EBIT Margin

The EBIT margin fell sharply from a positive 7.32% in 2019 to a negative -58.98% in 2020, reflecting a substantial operating loss likely due to adverse conditions. Although the margin improved to -2.5% in 2021, it remained negative. Recovery continued in 2022 and 2023, with margins reaching 4.39% and 6.19%, respectively, indicating progressive restoration of operating profitability.

Asset Turnover

The asset turnover ratio declined markedly from 0.76 in 2019 to 0.28 in 2020, signaling reduced efficiency in utilizing assets to generate revenue. The ratio recovered over the next years to 0.84 in 2023, surpassing the initial level and reflecting enhanced operational efficiency.

Return on Assets (ROA)

The return on assets mirrored the operational challenges, dropping from 2.81% in 2019 to a negative -14.33% in 2020, indicative of losses relative to total assets. While it remained negative at -3% in 2021, ROA gradually improved to 0.2% in 2022 and 1.3% in 2023, pointing to a gradual return to asset profitability, though not yet reaching pre-2019 levels.

Tax Burden

The tax burden ratio shows some fluctuations over the observed periods. Initially, it was 0.75 at the end of 2019, then it decreased to 0.68 by the end of 2022, suggesting a slightly lower proportion of earnings paid in taxes. By the end of 2023, the ratio increased again to 0.73, indicating a return close to the initial level.

Interest Burden

This ratio displays a significant decline in 2021 to 0.09 from 0.67 in 2019, indicating a substantial increase in interest expenses or reduced operating income relative to interest costs. By 2022 and 2023, the interest burden improved somewhat to 0.34 but remained below the 2019 level, reflecting ongoing challenges with interest expenses or earnings before interest and taxes.

EBIT Margin

The EBIT margin underwent a severe deterioration starting in 2020, plunging from a positive 7.32% in 2019 to a negative 58.98%. This indicates a substantial operating loss during that year. Although there was some recovery in subsequent years, the EBIT margin remained negative in 2021 at -2.5%, before improving to positive territory again with 4.39% in 2022 and further to 6.19% in 2023. This trend reflects a period of significant operational hardship followed by a gradual return to profitability.

Net Profit Margin

Aligned with the EBIT margin trend, the net profit margin shows a sharp decline starting 2020, falling from 3.68% in 2019 to a negative 51.25%. The margin remained negative at -6.67% in 2021 before returning to nearly break-even at 0.26% in 2022 and improving to 1.56% in 2023. This pattern highlights notable losses during the crisis period and a slow path towards net profitability in recent years.