American Airlines Group Inc. (NASDAQ:AAL)

Inventory Turnover

The inventory turnover ratio exhibited a declining trend from early 2020, decreasing from 24.73 in March 2020 to a low of 7.74 in June 2021. Subsequently, it demonstrated a consistent recovery, rising steadily to 23.2 by September 2023, before slightly decreasing to 22 in December 2023. This pattern indicates an initial slowdown in inventory movement followed by recovery and improved inventory management efficiency.

Receivables Turnover

The receivables turnover ratio peaked sharply at 42.84 in June 2020, after which it declined to 12.92 by March 2021. Following this decline, the ratio gradually increased and stabilized around the mid-20 range, reaching 26.06 by December 2023. This suggests increased efficiency in collecting receivables post mid-2021 after a period of slower collections.

Payables Turnover

Payables turnover increased from 22.2 in March 2020 to a peak of 28.39 in September 2020, then sharply declined to 7.9 in June 2021. After this trough, it improved steadily, reaching 24.92 by September 2023, before decreasing slightly to 22.43 in December 2023. The fluctuations indicate changes in the company’s payment pace to suppliers, with a notable period of delayed payments in mid-2021.

Working Capital Turnover

Data for working capital turnover is sparse, appearing only in 2021 with values of 16.97 and 16.6 in the first two quarters, followed by a significant spike to 95.26 in the third quarter before the data ends. This irregularity suggests either a one-off event or reporting inconsistency during that period.

Average Inventory Processing Period

The average inventory processing period lengthened substantially from 15 days at the start of 2020 to a peak of 47 days in June 2021, indicating slower inventory turnover. From that peak, the period shortened steadily to 16-17 days by the end of 2023, reflecting improved inventory management and faster turnover.

Average Receivable Collection Period

Receivables collection days decreased from 17 in December 2019 to 9-10 days in mid-2019 but then increased again, peaking at 28 days in March 2021 and June 2021. From that point, it gradually declined and stabilized around 14 days towards the end of 2023, showing enhanced receivables management and faster collections.

Operating Cycle

The operating cycle expanded from 29 days in early 2020 to a high of 75 days by June 2021, indicating an elongated period between cash outflow on inventory and cash inflow from receivables. Thereafter, it shortened steadily to about 31 days by December 2023, aligning closely with pre-pandemic levels and signifying improved operational efficiency.

Average Payables Payment Period

The payment period oscillated significantly, shortening from 16 days early in 2020 to a low of 13 days in September 2020, then lengthening sharply to 46 days in June 2021. After this peak, it decreased consistently to about 15-17 days by the end of 2023. This reflects changes in payment policies, with a pronounced delay in payments mid-2021 followed by normalization.

Cash Conversion Cycle

The cash conversion cycle followed an upward trend from 13 days in early 2020, peaking at 37 days in March 2021, before declining to a range of 13-16 days by late 2023. This indicates that the company experienced increased cash flow strain during the early pandemic period but successfully improved cash management thereafter.

Operating Revenues

Operating revenues exhibited a generally fluctuating pattern over the analyzed period. There was a decline starting in the first quarter of 2020, coinciding with the onset of the global pandemic, dropping significantly from 11,313 million US dollars in December 2019 to a low of 1,622 million US dollars in the second quarter of 2020. Following this trough, revenues showed a steady recovery through the remainder of 2020 and into 2021, reaching 9,427 million US dollars by the end of 2021. The upward trend continued into 2022 and 2023, with revenues peaking at 14,055 million US dollars in the second quarter of 2023 before slightly declining towards the end of 2023 to 13,062 million US dollars.

Aircraft Fuel, Spare Parts and Supplies, Net

The cost of aircraft fuel, spare parts, and supplies remained relatively stable prior to 2020, with a modest increase from 1,666 million US dollars in the first quarter of 2019 to 1,851 million US dollars by the end of that year. During 2020, costs slightly decreased but stabilized around the 1,600 million US dollars mark, reflecting reduced operational activity. From 2021 onward, there was a noticeable upward trend, reaching 2,279 million US dollars by the last quarter of 2022. The costs remained elevated through 2023, with values fluctuating near the 2,400 million US dollars level, indicating rising operational expenses likely correlated with the revenue recovery and increased activity.

Inventory Turnover

Inventory turnover was not reported before mid-2019 but displayed a clear declining trend starting from 24.73 in the third quarter of 2019 to a low point of 7.74 in the second quarter of 2021. This decline indicates that inventory was being cycled more slowly, potentially reflecting decreased demand or operational disruptions. However, from the third quarter of 2021 onward, the ratio increased steadily, reaching a peak of 23.2 in the third quarter of 2023 before a slight decrease to 22 by the end of 2023. This improvement suggests more efficient inventory management or increased operational activity alongside the company’s recovery phase.

Summary

The data reflects a substantial impact of external factors starting in early 2020, leading to sharp decreases in revenues and changes in inventory dynamics. Costs related to fuel and supplies remained comparatively stable during the early disruption period but increased as operations resumed. Inventory turnover trends mirrored the operational challenges and recovery, with slower turnover during the downturn and improvement as business conditions normalized. Overall, the company demonstrated a recovery trajectory through 2021 to 2023, with revenues approaching pre-pandemic levels and operational metrics improving accordingly.

The financial data reveals significant fluctuations in operating revenues and accounts receivable over the examined periods, indicating the impact of external events and the company's recovery trajectory.

Operating Revenues

Operating revenues demonstrated a relatively stable performance throughout 2019, ranging from approximately $10.6 billion to $11.9 billion per quarter. However, a sharp decline occurred beginning in the first quarter of 2020, with revenues dropping from $8.5 billion in March 2020 to a low point of $1.6 billion in June 2020, reflecting a severe contraction in business likely due to the onset of the COVID-19 pandemic. Subsequent quarters showed a gradual recovery, with revenues increasing to $9.4 billion by the fourth quarter of 2021. The upward trend continued into 2022, peaking at around $13.5 billion in the third quarter, before a slight deceleration toward the end of 2023, where quarterly revenues hovered around $13 billion. This pattern indicates a strong rebound, albeit with some periodic fluctuations potentially related to seasonal effects or market variability.

Accounts Receivable, Net

The net accounts receivable figures closely mirrored the revenue trends but with comparatively smaller magnitude shifts. Initial values in early 2019 ranged between $1.75 billion and $1.94 billion, declining to around $879 million in the second quarter of 2020, coinciding with the revenue downturn. From mid-2020 onwards, there was a steady increase, culminating in a peak of $2.1 billion in late 2022 and early 2023. While slightly decreasing in the latter quarters of 2023, the receivables remained elevated relative to the pre-pandemic levels, suggesting higher credit sales or longer collection periods during the recovery phase.

Receivables Turnover Ratio

This ratio, which reflects the efficiency of collecting receivables, was notably high in early 2020, peaking at 42.84 in the second quarter when revenues and receivables were at their lowest. This suggests rapid collection efforts or possibly lower sales on credit during this period. Following this peak, the turnover ratio decreased substantially through the remainder of 2020, reaching a low near 12.92, indicating a potential slowdown in collections or increased credit sales as revenues began to recover. From 2021 onwards, the ratio stabilized in the mid-20s range, aligning closer to pre-pandemic norms and indicating a return to consistent receivable management practices.

Overall, the data illustrates a severe disruption during early 2020 with a pronounced impact on revenues and related accounts receivable, followed by a progressive recovery marked by growing revenues and increasing receivables. The receivables turnover ratio’s inverse movement relative to revenue highlights shifts in credit management and collection efficiency during crisis and recovery phases. The end-state reflects a near-normalized financial operational pattern but with elevated receivables balances, which may warrant attention for receivables management.

The analysis of the quarterly financial data reveals several notable trends in the company's operations and payables management over the observed periods.

Operating Revenues

Operating revenues exhibit a general pattern of fluctuation aligned with external conditions affecting demand. Beginning with stable quarterly revenues around 11,900 million US dollars during 2019, a significant decline is evident starting in the first quarter of 2020, dropping to 8,515 million US dollars. This downward trend intensifies in the second quarter of 2020, with a trough at 1,622 million US dollars, indicative of substantial operational challenges.

Subsequently, operating revenues demonstrate a recovery trend, increasing each quarter through 2021 and 2022, reaching a high point of approximately 13,462 million US dollars in the third quarter of 2022. The revenue then stabilizes at a relatively high level through the end of 2023, with amounts ranging around 13,000 to 14,000 million US dollars, suggesting a return to near pre-disruption revenue conditions.

Accounts Payable

Accounts payable levels show moderate variability over the analysis period. Initial figures in 2019 ranged from approximately 1,932 to 2,139 million US dollars, but a decline is noticeable starting in early 2020, bottoming near 1,075 million US dollars in the third quarter of 2020.

A recovery follows, with accounts payable increasing steadily through 2021 and peaking at roughly 2,733 million US dollars in mid-2022. Thereafter, a slight decline and stabilization occurs, with payables fluctuating around 2,100 to 2,450 million US dollars into the last quarter of 2023.

Payables Turnover Ratio

The payables turnover ratio shows pronounced variation, especially when considered alongside the disruptions evident in revenue and payables levels. Early in 2020, turnover ratios are elevated, peaking at approximately 28.39 in the third quarter, reflecting faster payment cycles or reduced payables balances relative to cost of goods or purchases.

In contrast, the second quarter of 2020 yields the lowest ratio near 7.9, indicative of slower payment or possibly extended credit terms under financial stress.

Throughout 2021 and into 2022, ratios steadily increase again, reaching values near 21-24 by the end of 2023, consistent with recovery phases and normalized supplier payment patterns.

These swings suggest adaptive management of payables in response to liquidity pressures and operational conditions, with quicker turnover during recovery phases and slower turnover during peak disruption.

In summary, the data reflect a substantial impact on revenue and payables during the initial disruption period beginning early 2020, followed by a gradual return to normalized operating conditions and financial management practices through 2023. The trends in payables turnover correspond closely with these operational cycles, indicating strategic adjustments in supplier payment policies aligned with market and internal financial pressures.

The financial data reveals several noteworthy trends over the analyzed periods, particularly in working capital, operating revenues, and working capital turnover ratios.

Working Capital

Working capital was consistently negative throughout the periods, indicating a deficit in current assets relative to current liabilities. The deficit worsened sharply in early 2020, reaching a low of -12,038 million USD by March 31, 2020, coinciding with the onset of the COVID-19 pandemic. Mid-2020 showed some improvement in working capital levels, with the deficit reducing to around -4,211 to -5,474 million USD by December 31, 2020. Positive working capital was briefly observed in the first half of 2021, with values peaking at 1,126 million USD on June 30, 2021, before declining again. However, from the second half of 2021 onward, working capital reverted to negative values and demonstrated a gradual worsening trend through 2023, reaching -8,490 million USD by December 31, 2023.

Operating Revenues

Operating revenues displayed a strong seasonal pattern prior to 2020, with quarterly revenues fluctuating between approximately 10.5 billion and 12 billion USD in 2019. The pandemic severely impacted revenues beginning in the first quarter of 2020, where a steep decline occurred, reaching a low of 1.622 billion USD in the second quarter of 2020. Thereafter, a gradual recovery is evident as revenues increased each quarter through late 2021 and into 2022, peaking at 13.462 billion USD in the second quarter of 2022, surpassing pre-pandemic levels. The data into 2023 shows revenues stabilizing in a range slightly below this peak, with fluctuations between 12.9 billion and 14.1 billion USD, indicating a recovery to near-normal operational levels.

Working Capital Turnover

The working capital turnover ratio is reported only in a few quarters during 2021 and shows extremely volatile values. The metrics indicate 16.97 in September 2021 and an unusually high spike to 95.26 in December 2021, suggesting anomalous behavior possibly driven by the small or positive working capital base in those periods. The high turnover ratios likely reflect efficient use of limited working capital or accounting variations, but due to sparse data points, this metric cannot be reliably analyzed over time.

Overall, the company experienced significant liquidity challenges during the pandemic period, as evidenced by worsened working capital deficits and a dramatic revenue decline. Post-pandemic quarters show partial financial recovery with improving revenue trends; however, working capital remains negative and deteriorates again toward the end of the analyzed span, indicating persistent short-term liquidity constraints or increased current liabilities. The exceptional fluctuations in working capital turnover during 2021 merit further investigation for operational and accounting reasons.

Inventory Turnover Ratio

The inventory turnover ratio demonstrated a significant decline starting from the first quarter of 2020. Initially, the ratio was 24.73, decreasing steadily through the subsequent quarters to a low of 7.74 in the second quarter of 2021. This trend indicates a slower turnover of inventory during this period. However, beginning in the third quarter of 2021, the turnover ratio showed a consistent recovery, gradually rising to 22 by the fourth quarter of 2023. This recovery suggests an improvement in inventory management and a return to more efficient inventory cycles over time.

Average Inventory Processing Period

This metric inversely mirrors the trend observed in the inventory turnover ratio. It started at 15 days in the first quarter of 2020 and escalated sharply, reaching a peak of 47 days by the second quarter of 2021. This increase indicates that inventory was held for longer periods during this time, which may reflect operational disruptions or changes in demand. From the third quarter of 2021 onwards, the average inventory processing period steadily decreased, reaching 17 days by the fourth quarter of 2023. This downward trend is consistent with the improvement seen in the inventory turnover ratio, implying a return to quicker inventory processing and possibly more effective supply chain management.

Overall Analysis

The data from 2020 to mid-2021 show a period of reduced efficiency in inventory turnover, likely influenced by external factors affecting business operations. The subsequent quarters reflect a recovery phase with progressive normalization of inventory dynamics. By the end of 2023, the inventory turnover ratio and average inventory processing days approach levels indicative of efficient inventory handling similar to pre-2020 benchmarks. These trends suggest an adaptive response to earlier challenges and an enhancement in operational performance over the analyzed period.

The receivables turnover ratio and the average receivable collection period demonstrate notable variations over the observed quarters, reflecting shifts in the efficiency of accounts receivable management.

Receivables Turnover Ratio

The ratio begins from a baseline of 26.15 in March 2020, peaks to 42.84 in June 2020, and then generally decreases to 21.69 by December 2020. Post this period, a downward trend continues into the first quarter of 2021, reaching a low of 12.92 in March 2021. Subsequently, the turnover ratio shows a steady recovery and improvement, rising progressively to 26.06 by the end of December 2023. This indicates fluctuating yet ultimately improving effectiveness in collecting receivables over time.

Average Receivable Collection Period

The collection period closely mirrors the inverse pattern of the turnover ratio. Initially, it improves from 14 days in March 2020 to a low of 9 days in June 2020, indicating faster collection. However, it then lengthens significantly to 28 days by March and June 2021, suggesting slower collections during this period. From mid-2021 onwards, the collection period shortens consistently, stabilizing around 14 to 16 days through to the end of 2023, reflecting improved receivables management efficiency over the latter quarters.

Overall, the analysis reflects a period of significant volatility early in the timeline, likely influenced by external disruptions, followed by a recovery phase where both turnover ratio and collection period metrics show signs of stabilization and improvement, indicating enhanced credit control and cash flow management practices in recent periods.

The analysis of the presented quarterly financial information reveals notable changes in the company’s working capital efficiency over the period covered.

Average Inventory Processing Period

This metric began at 15 days in the first recorded quarter and showed a rising trend through 2020, peaking at 47 days in the second quarter of 2021. Following this peak, a consistent decline is observed, reducing the period to 16-17 days by the end of 2023. The initial increase may suggest challenges in inventory turnover, possibly due to operational disruptions, while the subsequent decrease indicates improvements in inventory management efficiency.

Average Receivable Collection Period

The average collection period decreased from 14 days in March 2020 to 9 days in June 2020, then gradually increased to a peak of 28 days in the first half of 2021. After this peak, the period steadily declined to 14 days by the end of 2023. This pattern implies initial improvements in receivables management, followed by a temporary extension in collection times, and eventual stabilization at a more favorable level, indicating enhanced credit policies or improved customer payment behavior over time.

Operating Cycle

The operating cycle, calculated as the sum of the average inventory processing period and the average receivable collection period, reflected these underlying trends. Starting around 29 days in March 2020, it increased sharply to a peak of 75 days in the second quarter of 2021. Thereafter, a steady decrease brought the cycle down to approximately 31 days by the end of 2023. This overall trajectory suggests a period of operational stress followed by recovery and improved working capital cycle efficiency.

In summary, the data illustrates significant operational volatility during the 2020-2021 period, likely linked to external disruptions affecting inventory turnover and receivables collection. The subsequent quarters exhibit a return to more efficient working capital management, with reductions in both inventory and receivables periods contributing to a shorter and more favorable operating cycle by 2023.

The payables turnover ratio exhibits notable volatility across the analyzed periods. Starting from March 2020, it initially increased, peaking at 28.39 in September 2020, which indicates a quicker payment to suppliers during that quarter. However, this was followed by a significant decline, reaching the lowest value of 7.9 in June 2021, suggesting a slowing pace of settling payables. From this trough, the ratio gradually improved, moving upwards into late 2023, where values stabilized around the low to mid-20s, indicative of a more consistent and relatively brisk payment cycle.

Correspondingly, the average payables payment period, measured in days, shows an inverse pattern to the payables turnover. The payment period shortened notably to 13-16 days in late 2019 and early 2020, then extended sharply, peaking at 46 days in June 2021. This extension aligns with the previously noted dip in payables turnover, reflecting an elongated settlement timeframe. Subsequent quarters reveal a gradual contraction of the payment period, returning to the 15-17 day range by the end of 2023, signifying a return to faster payment of obligations.

Payables turnover ratio trends

Increased sharply in the early phases of the period analyzed (up to late 2020), indicating faster payments.

Sharp decline through mid-2021, reflecting slower payment of payables.

Gradual recovery and stabilization in 2022 and 2023, with turnover ratios around 20-25.

Average payables payment period patterns

Shortest payment periods occurred in late 2019 and early 2020 (13-16 days).

Payment period extended to a peak of 46 days in mid-2021, indicating delayed payments.

Contracted steadily post-mid 2021, stabilizing around 15-17 days by the end of 2023.

Overall, these patterns suggest that the company experienced a period of accelerated payments early in the pandemic, followed by cash flow management strategies that delayed payments significantly through mid-2021. Since then, the payment cycle has normalized, reflecting improved liquidity and a restoration of supplier payment terms.

Average Inventory Processing Period

The average inventory processing period was initially recorded starting from March 31, 2020, at 15 days. It then increased progressively, reaching a peak of 47 days by June 30, 2021. Afterward, there was a noticeable downward trend, reducing to 28 days by December 31, 2021, and continuing to decrease through 2022 and 2023. By the fourth quarter of 2023, the period stabilized around 16 to 17 days, reflecting improved inventory management or faster turnover.

Average Receivable Collection Period

The average receivable collection period started at 14 days on March 31, 2020, decreased to 9-10 days during the middle of 2020, but subsequently increased to a peak of 28 days during the first half of 2021. Following this peak, the receivable period ranged between 14 and 20 days throughout the remaining periods, with a slight decrease to 14 days by the end of 2023. Overall, the receivable collection period showed some volatility but displayed a general trend toward shorter collection times toward the end of the reported periods.

Average Payables Payment Period

The payables payment period started at 16 days on March 31, 2020, and exhibited fluctuations over time. It dropped slightly to 13-14 days during mid-2020, then sharply increased to a peak of 46 days by June 30, 2021. This duration subsequently decreased steadily to approximately 15-17 days by the end of 2023, indicating a return to quicker payment cycles after a significant extension during the mid-2021 period.

Cash Conversion Cycle

The cash conversion cycle initially stood at 13 days on March 31, 2020, then fluctuated between 10 and 25 days through 2020 and 2021, including a peak of 37 days by March 31, 2021. From 2022 onward, the cycle stabilized within a narrower range between 10 and 17 days, ending at 15 to 16 days in the last quarter of 2023. The data suggest an overall improvement in cyclical cash flow efficiency after prior volatility, reflecting better alignment of inventory, receivables, and payables management.