Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
American Airlines Group Inc., 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).
The profitability ratios exhibit a severe V-shaped trajectory, characterized by a drastic contraction in 2020 followed by a consistent, multi-year recovery phase through 2023.
- Operating Profit Margin
- A significant collapse is observed from 6.70% in 2019 to -60.11% in 2020. This was followed by a steady upward trend, improving to -3.54% in 2021 and returning to positive territory at 3.28% in 2022. By 2023, the margin reached 5.75%, nearly recovering to the 2019 baseline.
- Net Profit Margin
- The net profit margin mirrored the operating trend, plummeting from 3.68% in 2019 to -51.25% in 2020. A gradual recovery occurred over the subsequent three years, with the margin reaching 0.26% in 2022 and 1.56% in 2023. While positive, the net margin remains below the 2019 level.
- Return on Assets (ROA)
- Asset utilization experienced a sharp decline from 2.81% in 2019 to -14.33% in 2020. The metric showed consistent improvement thereafter, moving to -3.00% in 2021 and 0.20% in 2022, before ending the period at 1.30% in 2023.
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Operating Profit Margin
American Airlines Group Inc., operating profit margin 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 income (loss) | 3,034) | 1,607) | (1,059) | (10,421) | 3,065) | |
| Operating revenues | 52,788) | 48,971) | 29,882) | 17,337) | 45,768) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 5.75% | 3.28% | -3.54% | -60.11% | 6.70% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| FedEx Corp. | 5.45% | 6.68% | 6.98% | — | — | |
| Uber Technologies Inc. | 2.98% | -5.75% | -21.97% | — | — | |
| Union Pacific Corp. | 37.65% | 39.87% | 42.83% | — | — | |
| United Airlines Holdings Inc. | 7.84% | 5.20% | -4.15% | — | — | |
| United Parcel Service Inc. | 10.05% | 13.05% | 13.17% | — | — | |
| Operating Profit Margin, Sector | ||||||
| Transportation | 9.61% | 10.07% | 9.44% | — | — | |
| Operating Profit Margin, Industry | ||||||
| Industrials | 9.90% | 9.06% | 9.24% | — | — | |
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 2023 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Operating revenues
= 100 × 3,034 ÷ 52,788 = 5.75%
2 Click competitor name to see calculations.
The financial performance between 2019 and 2023 is characterized by a severe contraction followed by a consistent multi-year recovery in both revenue and profitability.
- Revenue Trends
- Operating revenues experienced a sharp decline in 2020, falling to 17,337 million US dollars from 45,768 million US dollars in 2019. A sustained recovery followed, with revenues rising to 29,882 million US dollars in 2021, surpassing pre-pandemic levels in 2022 at 48,971 million US dollars, and reaching a period high of 52,788 million US dollars in 2023.
- Operating Income Fluctuations
- Operating income shifted from a profit of 3,065 million US dollars in 2019 to a significant loss of 10,421 million US dollars in 2020. This deficit was reduced to 1,059 million US dollars in 2021, marking a return to positive territory in 2022 with 1,607 million US dollars, and concluding the period with 3,034 million US dollars in 2023.
- Operating Profit Margin Analysis
- The operating profit margin exhibited extreme volatility, plummeting from 6.70% in 2019 to -60.11% in 2020. A steady upward trajectory was observed thereafter, with the margin improving to -3.54% in 2021, 3.28% in 2022, and 5.75% in 2023. Although the margin has nearly returned to its 2019 level, the recovery indicates a gradual restoration of operational efficiency over the four-year period.
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Net Profit Margin
American Airlines Group Inc., net profit margin 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 income (loss) | 822) | 127) | (1,993) | (8,885) | 1,686) | |
| Operating revenues | 52,788) | 48,971) | 29,882) | 17,337) | 45,768) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 1.56% | 0.26% | -6.67% | -51.25% | 3.68% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| FedEx Corp. | 4.41% | 4.09% | 6.23% | — | — | |
| Uber Technologies Inc. | 5.06% | -28.68% | -2.84% | — | — | |
| Union Pacific Corp. | 26.45% | 28.13% | 29.92% | — | — | |
| United Airlines Holdings Inc. | 4.87% | 1.64% | -7.97% | — | — | |
| United Parcel Service Inc. | 7.37% | 11.51% | 13.25% | — | — | |
| Net Profit Margin, Sector | ||||||
| Transportation | 7.28% | 4.73% | 9.05% | — | — | |
| Net Profit Margin, Industry | ||||||
| Industrials | 8.32% | 5.04% | 5.85% | — | — | |
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 2023 Calculation
Net profit margin = 100 × Net income (loss) ÷ Operating revenues
= 100 × 822 ÷ 52,788 = 1.56%
2 Click competitor name to see calculations.
The financial performance from 2019 to 2023 is characterized by a severe volatility cycle, marked by a significant contraction followed by a multi-year recovery phase. The period demonstrates a V-shaped trajectory in both top-line revenue and bottom-line profitability, reflecting a return to positive earnings after a period of substantial losses.
- Revenue Trajectory
- Operating revenues experienced a sharp decline in 2020, falling to 17,337 million US dollars from 45,768 million US dollars in 2019. A consistent upward trend followed this decline, with revenues expanding to 29,882 million US dollars in 2021, 48,971 million US dollars in 2022, and reaching 52,788 million US dollars by 2023, effectively surpassing the initial 2019 baseline.
- Net Income Volatility
- Net income shifted from a positive 1,686 million US dollars in 2019 to a deep net loss of 8,885 million US dollars in 2020. The scale of these losses narrowed significantly in 2021 to 1,993 million US dollars. A return to profitability was achieved in 2022 with a net income of 127 million US dollars, which grew to 822 million US dollars in 2023.
- Net Profit Margin Analysis
- The net profit margin mirrors the volatility of net income, plummeting from 3.68% in 2019 to -51.25% in 2020. A steady recovery trend is observed from 2021 onwards, with the margin improving to -6.67% in 2021, 0.26% in 2022, and 1.56% in 2023. Although the margin has returned to positive territory, the 2023 figure remains below the 2019 level, suggesting that while the company has restored profitability, the efficiency of converting operating revenue into net profit has not yet fully returned to pre-2020 levels.
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Return on Equity (ROE)
American Airlines Group Inc., ROE 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 income (loss) | 822) | 127) | (1,993) | (8,885) | 1,686) | |
| Stockholders’ deficit | (5,202) | (5,799) | (7,340) | (6,867) | (118) | |
| Profitability Ratio | ||||||
| ROE1 | — | — | — | — | — | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| FedEx Corp. | 15.23% | 15.34% | 21.64% | — | — | |
| Uber Technologies Inc. | 16.77% | -124.54% | -3.43% | — | — | |
| Union Pacific Corp. | 43.14% | 57.54% | 46.06% | — | — | |
| United Airlines Holdings Inc. | 28.08% | 10.69% | -39.05% | — | — | |
| United Parcel Service Inc. | 38.76% | 58.36% | 90.44% | — | — | |
| ROE, Sector | ||||||
| Transportation | 27.38% | 19.64% | 30.78% | — | — | |
| ROE, Industry | ||||||
| Industrials | 27.70% | 15.38% | 15.38% | — | — | |
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 2023 Calculation
ROE = 100 × Net income (loss) ÷ Stockholders’ deficit
= 100 × 822 ÷ -5,202 = —
2 Click competitor name to see calculations.
The financial trajectory over the observed five-year period is characterized by a profound collapse in profitability and equity followed by a gradual recovery phase. The period is marked by a persistent stockholders' deficit, which significantly alters the interpretation of profitability ratios.
- Net Income Trends
- A sharp reversal in earnings occurred between 2019 and 2020, with net income shifting from a surplus of US$ 1,686 million to a loss of US$ 8,885 million. While losses persisted into 2021 at US$ 1,993 million, a return to profitability was achieved in 2022 with a net income of US$ 127 million, which further improved to US$ 822 million by the end of 2023.
- Equity Position
- The company maintained a negative equity position throughout the entire period. The stockholders' deficit expanded drastically from US$ 118 million in 2019 to a peak of US$ 7,340 million in 2021. A trend of gradual recovery in the equity base is observed from 2022 through 2023, with the deficit narrowing to US$ 5,202 million.
- Return on Equity (ROE) Analysis
- The presence of a stockholders' deficit renders standard ROE metrics mathematically distorted. During the years of significant net losses (2020 and 2021), the combination of negative net income and negative equity would produce a mathematically positive ROE, despite severe operational distress. Conversely, the return to positive net income in 2022 and 2023, while fundamentally positive for the business, results in a negative ROE because the earnings are being generated against a negative equity base. This indicates that while the company has returned to profitability, the accumulated deficits from prior years still outweigh total assets.
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Return on Assets (ROA)
American Airlines Group Inc., ROA 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 income (loss) | 822) | 127) | (1,993) | (8,885) | 1,686) | |
| Total assets | 63,058) | 64,716) | 66,467) | 62,008) | 59,995) | |
| Profitability Ratio | ||||||
| ROA1 | 1.30% | 0.20% | -3.00% | -14.33% | 2.81% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| FedEx Corp. | 4.56% | 4.45% | 6.32% | — | — | |
| Uber Technologies Inc. | 4.88% | -28.47% | -1.28% | — | — | |
| Union Pacific Corp. | 9.50% | 10.69% | 10.27% | — | — | |
| United Airlines Holdings Inc. | 3.68% | 1.09% | -2.88% | — | — | |
| United Parcel Service Inc. | 9.47% | 16.24% | 18.57% | — | — | |
| ROA, Sector | ||||||
| Transportation | 6.44% | 4.34% | 6.88% | — | — | |
| ROA, Industry | ||||||
| Industrials | 5.61% | 3.31% | 3.40% | — | — | |
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 2023 Calculation
ROA = 100 × Net income (loss) ÷ Total assets
= 100 × 822 ÷ 63,058 = 1.30%
2 Click competitor name to see calculations.
The financial performance from 2019 to 2023 is characterized by a severe contraction followed by a multi-year recovery phase. A significant volatility in net income is observed, which directly correlates with the fluctuations in Return on Assets (ROA). While total assets remained relatively stable throughout the period, the ability to generate profit from those assets experienced a drastic decline before returning to positive territory in the final two years.
- Net Income and Profitability Trends
- A precipitous decline in net income occurred in 2020, reaching a loss of 8,885 million US$, which triggered a corresponding drop in ROA to -14.33%. This represents the lowest point of operational efficiency in the analyzed period. Subsequent years show a steady trajectory of improvement, with net losses narrowing in 2021 and shifting to positive net income by 2022 and 2023.
- Asset Base Utilization
- Total assets exhibited a gradual increase from 59,995 million US$ in 2019 to a peak of 66,467 million US$ in 2021. Despite this expansion of the asset base, the ROA remained negative during this growth phase, indicating that the increase in assets did not immediately translate into profitability. From 2022 onwards, a slight contraction in total assets coincided with a return to positive ROA, suggesting an improvement in asset efficiency.
- Return on Assets (ROA) Recovery
- The ROA followed a recovery pattern characterized by a gradual climb from the 2020 trough of -14.33% to -3.00% in 2021, 0.20% in 2022, and finally 1.30% by the end of 2023. Although the 2023 ROA indicates a successful return to profitability, the figure remains below the 2019 baseline of 2.81%, suggesting that asset productivity has not yet fully returned to pre-crisis levels.
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