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).
The financial trajectory between 2019 and 2023 is marked by a period of extreme volatility, featuring a severe contraction in 2020 followed by a consistent recovery phase. Both operating cash flow and free cash flow to the firm experienced significant declines before returning to positive territory.
- Operating Cash Flow Trends
- Net cash provided by operating activities shifted from a positive 3,815 million US$ in 2019 to a substantial deficit of 6,543 million US$ in 2020. A progressive recovery followed, with figures rising to 704 million US$ in 2021, 2,173 million US$ in 2022, and reaching 3,803 million US$ by 2023, effectively returning to pre-2020 levels.
- Free Cash Flow to the Firm (FCFF) Analysis
- FCFF exhibited more extreme fluctuations than operating cash flow. After a modest 357 million US$ in 2019, the figure plummeted to -7,780 million US$ in 2020. A sharp rebound occurred in 2021, with FCFF reaching 1,593 million US$—notably exceeding the operating cash flow for that period. This was followed by a dip to 846 million US$ in 2022 and a peak of 2,489 million US$ in 2023.
- Comparative Cash Flow Dynamics
- The divergence between operating cash flow and FCFF in 2020 indicates that capital outflows exceeded operating losses, as the FCFF deficit was 1,237 million US$ deeper than the operating cash deficit. Conversely, the 2023 results demonstrate the strongest overall cash position for the firm within the observed period, with FCFF reaching its highest point at 2,489 million US$, signaling an improved capacity to generate cash available to all capital providers after accounting for capital expenditures.
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Interest Paid, Net of Tax
American Airlines Group Inc., interest paid, net of tax calculation
US$ 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
An analysis of the interest expenditures net of tax from 2019 to 2023 reveals a general upward trajectory, characterized by an initial decline followed by a significant and sustained increase in costs.
- Interest Paid Trends
- Interest payments net of tax decreased from 830 million US$ in 2019 to 732 million US$ in 2020. This was followed by a sharp increase in 2021, where expenses rose to 1,277 million US$. After remaining relatively stable in 2022 at 1,265 million US$, the expenditure reached a five-year peak in 2023 at 1,599 million US$.
- Effective Income Tax Rate (EITR) Volatility
- The EITR demonstrated fluctuations over the reported period, moving from 25.27% in 2019 to a low of 21.78% in 2021. A significant spike occurred in 2022, with the rate reaching 31.72%, before moderating to 26.67% in 2023.
- Analysis of Net Cost Drivers
- The substantial rise in interest paid net of tax, particularly between 2020 and 2023, indicates an increase in the gross cost of debt or a higher volume of interest-bearing liabilities. The volatility of the EITR suggests that the tax shield associated with these interest payments shifted annually; notably, the highest net interest payment in 2023 occurred alongside a moderate tax rate, while the 2022 peak in EITR did not result in a meaningful reduction of the net interest burden compared to 2021.
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Enterprise Value to FCFF Ratio, Current
American Airlines Group Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ 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. | 13.97 |
| Uber Technologies Inc. | 14.95 |
| Union Pacific Corp. | 30.01 |
| United Airlines Holdings Inc. | 12.29 |
| United Parcel Service Inc. | 17.55 |
| EV/FCFF, Sector | |
| Transportation | 30.57 |
| EV/FCFF, Industry | |
| Industrials | 33.73 |
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 | 26.41 | — | — | |
| United Airlines Holdings Inc. | 56.36 | 11.88 | 79.24 | — | — | |
| United Parcel Service Inc. | 25.28 | 16.83 | 16.98 | — | — | |
| EV/FCFF, Sector | ||||||
| Transportation | 32.19 | 21.84 | 24.82 | — | — | |
| EV/FCFF, Industry | ||||||
| Industrials | 25.97 | 24.33 | 28.81 | — | — | |
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.
The Enterprise Value (EV) exhibited a pattern of relative stability over the analyzed period, peaking at US$ 36,628 million in 2020 before gradually declining to US$ 34,098 million by the end of 2023. In contrast, Free Cash Flow to the Firm (FCFF) demonstrated extreme volatility, characterized by a severe contraction in 2020 and a subsequent multi-year recovery phase.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF experienced a critical decline in 2020, reaching a deficit of US$ 7,780 million. A recovery followed in 2021 with a positive cash flow of US$ 1,593 million, although a secondary contraction occurred in 2022, with values falling to US$ 846 million. The period concluded with a significant expansion in 2023, where FCFF reached its highest observed level of US$ 2,489 million.
- EV/FCFF Ratio Analysis
- The EV/FCFF ratio showed significant fluctuations, primarily driven by the volatility of cash flows rather than changes in enterprise value. The ratio was highly elevated in 2019 at 90.70, and was non-calculable in 2020 due to negative FCFF. A sharp reduction to 22.58 was observed in 2021, followed by an increase to 42.39 in 2022. By 2023, the ratio reached a period low of 13.70, indicating a substantial improvement in cash generation relative to the total enterprise value.
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