Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
American Airlines Group Inc., FCFF calculation
US$ in millions
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).
- Operating Activities Cash Flow
- The net cash provided by operating activities exhibited significant volatility over the analyzed period. In 2019, the figure was notably positive at approximately 3.8 billion USD. This changed drastically in 2020, turning negative to around -6.5 billion USD, likely reflecting substantial operational challenges. In 2021, the cash flow from operating activities showed a recovery, returning to a positive value of 704 million USD. The upward trend continued in 2022 and 2023, reaching approximately 2.2 billion USD and 3.8 billion USD respectively, indicating a gradual restoration of operational cash generation capacity.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm displayed a parallel pattern to the operating cash flow, starting with a modest positive value of 357 million USD in 2019. However, a sharp decline occurred in 2020, plunging into negative territory at -7.78 billion USD, suggesting heavy investment outlays or other cash uses beyond operating cash flows during this period. The subsequent years showed a recovery trend, with FCFF rebounding to positive figures of 1.59 billion USD in 2021, tapering to 846 million USD in 2022, and then increasing again to 2.49 billion USD by 2023. This recovery trajectory highlights a restoration of free cash generation capability following the adverse period in 2020.
- Overall Trends and Insights
- The data reflect the substantial impact experienced in 2020, likely due to external environmental factors affecting cash flows. Both operating cash flows and free cash flows were severely constrained during this year, but improved progressively thereafter. By 2023, both metrics nearly returned to or exceeded pre-2019 levels, indicating effective operational and financial management to restore liquidity and cash-generating ability. The volatility underscores the sensitivity of the company's financial health to external shocks and its corresponding recovery efforts.
Interest Paid, Net of Tax
American Airlines Group Inc., interest paid, net of tax calculation
US$ in millions
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).
2 2023 Calculation
Interest paid, net, tax = Interest paid, net × EITR
= 2,180 × 26.67% = 581
- Effective Income Tax Rate (EITR)
- The effective income tax rate showed a decreasing trend from 25.27% in 2019 to 21.78% in 2021, indicating a reduction in the tax burden during this period. However, the rate increased significantly to 31.72% in 2022, before declining again to 26.67% in 2023. This pattern suggests some variability in tax influences, possibly related to changes in taxable income or adjustments in tax regulations affecting the company.
- Interest Paid, Net, Net of Tax
- The net interest paid, after accounting for tax effects, exhibited fluctuations over the five-year period. Starting at $830 million in 2019, it decreased slightly to $732 million in 2020, potentially reflecting lower borrowing costs or reduced debt levels during the onset of the pandemic. Subsequently, it increased notably to $1,277 million in 2021 and remained relatively stable at $1,265 million in 2022. In 2023, there was a further rise to $1,599 million, indicating increased interest expenses possibly related to higher debt levels or rising interest rates.
Enterprise Value to FCFF Ratio, Current
American Airlines Group Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 34,098) |
| Free cash flow to the firm (FCFF) | 2,489) |
| Valuation Ratio | |
| EV/FCFF | 13.70 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| FedEx Corp. | 19.37 |
| Uber Technologies Inc. | 25.50 |
| Union Pacific Corp. | 23.74 |
| United Airlines Holdings Inc. | 9.01 |
| United Parcel Service Inc. | 13.19 |
| EV/FCFF, Sector | |
| Transportation | 29.40 |
| EV/FCFF, Industry | |
| Industrials | 30.62 |
Based on: 10-K (reporting date: 2023-12-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
American Airlines Group Inc., historical EV/FCFF 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) | ||||||
| Enterprise value (EV)1 | 34,098) | 35,839) | 35,954) | 36,628) | 32,401) | |
| Free cash flow to the firm (FCFF)2 | 2,489) | 846) | 1,593) | (7,780) | 357) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 13.70 | 42.39 | 22.58 | — | 90.70 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| FedEx Corp. | 23.94 | 19.13 | 18.72 | — | — | |
| Uber Technologies Inc. | 46.69 | 136.28 | — | — | — | |
| Union Pacific Corp. | 31.90 | 23.83 | 26.42 | 25.20 | — | |
| United Airlines Holdings Inc. | 56.36 | 11.88 | 79.24 | — | — | |
| United Parcel Service Inc. | 24.78 | 16.63 | 16.95 | 28.23 | — | |
| EV/FCFF, Sector | ||||||
| Transportation | 32.04 | 21.76 | 24.81 | 184.17 | — | |
| EV/FCFF, Industry | ||||||
| Industrials | 25.93 | 24.30 | 28.80 | 189.49 | — | |
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).
3 2023 Calculation
EV/FCFF = EV ÷ FCFF
= 34,098 ÷ 2,489 = 13.70
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value displays a general downward trend from 2019 through 2023. It began at 32,401 million US dollars in 2019, rose slightly to 36,628 million in 2020, then declined steadily over the next three years, reaching 34,098 million in 2023. This indicates a moderate contraction in the overall market valuation of the firm during the period following 2020.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm exhibits significant volatility across the observed years. Starting with a positive cash flow of 357 million US dollars in 2019, it sharply deteriorated to a substantial negative value of -7,780 million in 2020, reflecting extraordinary cash outflows likely related to adverse operating conditions. Subsequently, it recovered to positive territory, with 1,593 million in 2021, though this figure decreased to 846 million in 2022 before rising again to 2,489 million in 2023. Overall, the FCFF demonstrates a strong rebound after 2020 but with some fluctuations in the recovery pace.
- EV/FCFF Ratio
- The EV to FCFF ratio, which measures the valuation of the company relative to its free cash flow generation, shows wide variations. The ratio was extremely high at 90.7 in 2019, indicating potentially overvalued conditions or low cash flow relative to enterprise value. The ratio for 2020 is missing due to negative FCFF, which makes the ratio non-meaningful. In 2021, it dramatically decreased to 22.58, reflecting improved cash flow or adjusted valuation. However, it increased again to 42.39 in 2022 before substantially declining to 13.7 in 2023. The decreasing trend in the last year suggests an improvement in free cash flow generation relative to the enterprise value, enhancing the firm's valuation attractiveness.