United Airlines Holdings Inc. (NASDAQ:UAL)

The income tax expense (benefit) exhibited significant fluctuations over the five-year period. Initially, a substantial benefit was recognized, followed by a progression towards increasing expense. The components of this overall figure, current and deferred taxes, demonstrate distinct patterns contributing to the observed trend.

Current Tax

Current tax moved from a benefit of 10 million in 2021 to a benefit of 5 million in 2022. This was followed by a benefit of 13 million in 2023, then a significant shift to an expense of 84 million in 2024, and a subsequent decrease to an expense of 28 million in 2025. This indicates a changing profitability profile impacting current tax liabilities.

Deferred Tax

Deferred tax demonstrated a more pronounced volatility. A large benefit of 583 million was recorded in 2021, followed by a substantial decrease to a benefit of 248 million in 2022. The trend reversed in 2023 with a benefit of 756 million, continuing to an expense of 935 million in 2024, and a slight decrease to an expense of 925 million in 2025. The magnitude of the deferred tax component significantly influences the overall income tax expense (benefit).

Overall Income Tax Expense (Benefit)

The combined effect of current and deferred taxes resulted in a net benefit of 593 million in 2021. This transitioned to a net benefit of 253 million in 2022, then to a net benefit of 769 million in 2023. A substantial shift occurred in 2024, resulting in a net expense of 1,019 million, which decreased slightly to an expense of 953 million in 2025. The movement from a consistent benefit to a significant expense suggests a considerable change in taxable income and/or the utilization of tax loss carryforwards or other deferred tax assets.

The deferred tax component consistently represents the larger portion of the overall income tax expense (benefit), driving the overall trend. The increasing expense in 2024 and 2025, particularly within the deferred tax portion, warrants further investigation into the underlying causes, such as changes in tax rates, valuation allowance adjustments, or the reversal of previously recognized deferred tax assets.

The effective income tax rate exhibited fluctuations over the five-year period. While the statutory federal income tax rate remained constant at 21.00%, the effective income tax rate varied annually.

Effective Income Tax Rate Trend

In 2021, the effective income tax rate was 23.19%. This increased to 25.56% in 2022, representing the highest rate observed during the analyzed timeframe. A subsequent decrease to 22.70% occurred in 2023. The rate then rose again in 2024 to 24.40% before declining to 22.10% in 2025.

The effective income tax rate consistently differed from the statutory rate throughout the period. This suggests the presence of factors influencing the company’s tax obligations beyond the standard corporate tax rate. These factors could include tax credits, deductions, adjustments related to deferred tax assets and liabilities, or differences in tax rates across jurisdictions where the company operates.

Rate Differential

The largest difference between the effective and statutory rates was observed in 2022, with the effective rate exceeding the statutory rate by 4.56 percentage points. The smallest difference was in 2021, at 2.19 percentage points. The differential in 2025 was 1.10 percentage points.

The observed volatility in the effective income tax rate warrants further investigation to understand the underlying drivers and potential implications for future tax liabilities. A consistent analysis of these variances is crucial for accurate financial forecasting and reporting.

The composition of deferred tax assets and liabilities exhibits notable shifts over the five-year period. A general trend indicates a growing net deferred tax liability, transitioning from a net asset position to a substantial net liability by the end of the period.

Net Operating Loss (NOL) Carryforwards

Federal and state net operating loss carryforwards decreased from US$2,229 million in 2021 to US$2,149 million in 2024, before increasing slightly to US$2,326 million in 2025. This suggests a gradual utilization of these NOLs against future taxable income, followed by a modest replenishment potentially due to recent losses.

Deferred Revenue

Deferred revenue experienced a decline from US$2,349 million in 2021 to US$1,783 million in 2022. It then stabilized, fluctuating between US$1,845 million and US$1,894 million from 2023 to 2025. This indicates a consistent recognition of revenue previously deferred.

Operating Lease Liabilities

Operating lease liabilities decreased from US$1,272 million in 2021 to US$1,110 million in 2024, then increased to US$1,349 million in 2025. This fluctuation likely reflects changes in the company’s leasing activities and related accounting adjustments.

Employee Benefits

Employee benefits, encompassing pension, postretirement, and medical obligations, decreased significantly from US$986 million in 2021 to US$606 million in 2022. It then showed some recovery, reaching US$701 million in 2025. This suggests potential changes in benefit plan structures, actuarial valuations, or settlement of obligations.

Interest Expense Carryforward

An interest expense carryforward of US$510 million was recorded in 2022, increasing to US$579 million in 2023, then decreasing to US$109 million in 2025. This suggests a temporary increase in deferred interest expense, followed by a significant reduction, potentially due to changes in debt levels or interest rate environments.

Valuation Allowance

The valuation allowance against deferred tax assets remained relatively stable, fluctuating between -US$179 million and -US$210 million from 2021 to 2024, before decreasing to -US$151 million in 2025. This indicates a consistent assessment of the realizability of deferred tax assets.

Deferred Tax Liabilities

Deferred tax liabilities increased consistently throughout the period, rising from -US$6,829 million in 2021 to -US$9,546 million in 2025. This growth is primarily driven by increases in depreciation, operating lease right-of-use assets, and intangible assets, all of which generate future taxable amounts.

Net Deferred Income Tax

The net deferred income tax position shifted dramatically from a net asset of US$659 million in 2021 to a net liability of -US$2,463 million in 2025. This transition is attributable to the increasing deferred tax liabilities outpacing the deferred tax assets, less valuation allowance. The magnitude of the shift suggests a significant change in the company’s overall tax position.

Overall, the data indicates a growing trend of future taxable amounts relative to future deductible amounts, resulting in a substantial increase in net deferred tax liabilities. The utilization of NOLs and fluctuations in employee benefit obligations also contribute to the evolving deferred tax landscape.

A significant fluctuation in deferred tax assets and liabilities is observed over the analyzed period. Initially, deferred tax assets decreased substantially, followed by the emergence and subsequent growth of deferred tax liabilities.

Deferred Tax Assets

The value of deferred tax assets decreased from US$659 million in 2021 to US$91 million in 2022. Values for 2023, 2024, and 2025 are not reported, indicating a potential elimination or reclassification of these assets.

Deferred Tax Liabilities

Deferred tax liabilities were not reported in 2021 or 2022. They first appeared in 2023 at US$594 million, increasing to US$1,580 million in 2024 and further to US$2,463 million in 2025. This represents a consistent upward trend over the latter three years of the period.

The shift from a substantial deferred tax asset position in 2021 to a growing deferred tax liability position by 2025 suggests a change in the underlying temporary differences between the book and tax bases of assets and liabilities. The absence of deferred tax asset reporting after 2022 warrants further investigation to determine the reasons for their disappearance, such as utilization against taxable income or write-downs due to changes in tax law or expectations regarding future profitability.

The increasing deferred tax liabilities indicate the recognition of future taxable amounts. This could be due to various factors, including taxable temporary differences arising from revenue recognition or expense deductions. The substantial growth in deferred tax liabilities from 2023 to 2025 suggests a significant increase in these taxable temporary differences.

The financial information reveals adjustments made to reported figures, primarily impacting stockholders’ equity and net income, stemming from the removal of deferred tax assets or liabilities. These adjustments consistently increase net income and stockholders’ equity while decreasing total assets. The magnitude of these adjustments appears to be growing over the observed period.

Total Assets

Reported total assets demonstrate an overall upward trend from 2021 to 2025, increasing from US$68,175 million to US$76,448 million. However, the adjusted total assets are identical to the reported figures for 2023, 2024, and 2025, and only marginally different in 2021 and 2022. This suggests the adjustments related to deferred taxes primarily affect items beyond total assets after 2022.

Total Liabilities

Reported total liabilities exhibit a decrease from 2021 to 2022, followed by relative stability through 2024, and a slight decrease in 2025. Adjusted total liabilities follow a similar pattern, but show a more pronounced decrease from 2022 through 2025, indicating that the deferred tax adjustments contribute to a reduction in reported liabilities. The difference between reported and adjusted liabilities widens over time.

Stockholders’ Equity

Reported stockholders’ equity shows substantial growth from 2021 to 2025, increasing from US$5,029 million to US$15,282 million. Adjusted stockholders’ equity also increases over the same period, but consistently remains lower than the reported value. The gap between reported and adjusted equity expands significantly from US$656 million in 2021 to US$2,457 million in 2025, indicating a growing impact from the deferred tax adjustments. The adjustments consistently increase the reported equity.

Net Income (Loss)

Reported net income transitions from a loss of US$-1,964 million in 2021 to a profit of US$3,353 million in 2025. The adjusted net income shows a similar trend, but the adjustments consistently increase the reported net income in each year. The difference between reported and adjusted net income grows from US$583 million in 2021 to US$925 million in 2025. This suggests the removal of deferred tax items positively impacts reported profitability.

In summary, the adjustments consistently result in higher reported net income and stockholders’ equity, and lower reported liabilities. The magnitude of these adjustments increases over the period, suggesting a growing impact from the removal of deferred tax items on the financial statements. While total assets are initially affected, the adjustments primarily impact the income statement and balance sheet components related to equity and liabilities in later years.

The financial metrics presented demonstrate a consistent pattern of divergence between reported and adjusted values following the removal of deferred tax impacts. Generally, the adjusted ratios indicate a less favorable financial performance than initially indicated by reported figures, though both sets of metrics show improving trends over the observed period.

Profitability

Both reported and adjusted net profit margins exhibit an upward trend from 2021 to 2025. However, the adjusted net profit margin consistently falls below the reported margin, suggesting that deferred tax assets or liabilities positively influence reported profitability. The difference between the two margins narrows slightly over time, indicating a diminishing impact from deferred taxes. The adjusted margins show a more pronounced recovery from negative values in 2021 to positive values exceeding 7% by 2025.

Asset Turnover

Reported and adjusted total asset turnover ratios remain identical across all periods. This suggests that the removal of deferred tax assets or liabilities does not affect the efficiency with which assets are used to generate revenue. Both ratios demonstrate an increase from 0.36 in 2021 to 0.77 from 2023 through 2025, indicating improved asset utilization.

Financial Leverage

Adjusted financial leverage consistently exceeds reported financial leverage. This indicates that the removal of deferred tax items increases the company’s apparent reliance on debt financing. Both reported and adjusted leverage ratios demonstrate a decreasing trend from 2021 to 2025, suggesting a reduction in financial risk over time. The difference between the two ratios also decreases, implying a lessening impact of deferred taxes on the leverage calculation.

Return on Equity (ROE)

A similar pattern to net profit margin is observed in ROE. The adjusted ROE is consistently lower than the reported ROE, highlighting the positive influence of deferred taxes on equity returns. Both ROE metrics improve significantly from 2021 to 2025, with adjusted ROE rising from a substantial negative value to over 24% by 2025. The gap between reported and adjusted ROE diminishes over the period.

Return on Assets (ROA)

The adjusted ROA consistently falls below the reported ROA, mirroring the trends observed in profit margin and ROE. This indicates that deferred tax items contribute to a higher reported return on assets. Both ROA metrics show improvement from 2021 to 2025, with adjusted ROA increasing from negative values to over 5.6% by 2025. The difference between the two ROA values decreases slightly over time.

In summary, the adjustments for deferred taxes consistently present a more conservative financial picture. The trends across all ratios indicate a strengthening financial position from 2021 to 2025, even when considering the impact of removing deferred tax effects. The diminishing difference between reported and adjusted ratios suggests a potential stabilization of the deferred tax position.

The period under review demonstrates a significant improvement in both reported and adjusted net profit margins. Initially, the company experienced a substantial net loss in 2021, followed by a recovery and consistent growth in profitability through 2025. The adjusted net profit margin consistently exceeds the reported net profit margin across all observed years.

Reported Net Profit Margin

The reported net profit margin transitioned from a negative 7.97% in 2021 to positive values in subsequent years. A steady increase is observed, moving from 1.64% in 2022 to 5.68% in 2025. This indicates improving profitability as measured by reported net income.

Adjusted Net Profit Margin

The adjusted net profit margin mirrors the trend of the reported margin, but exhibits higher values. Starting at -10.34% in 2021, it rose to 2.19% in 2022, 6.28% in 2023, 7.16% in 2024, and finally reached 7.24% in 2025. The rate of increase appears to decelerate between 2024 and 2025.

Relationship between Reported and Adjusted Margins

A consistent difference exists between the reported and adjusted net profit margins each year. This suggests that adjustments made to net income have a material impact on the overall profitability picture. The magnitude of the adjustment appears relatively stable as a percentage of net income throughout the period.

Overall, the financial performance, as reflected in these margins, shows a strong recovery and positive trajectory. The consistent positive trend in both reported and adjusted net profit margins suggests improving operational efficiency and/or revenue generation. The difference between the two margins warrants further investigation to understand the nature and impact of the adjustments being made.

The reported and adjusted total asset turnover ratios for the period demonstrate a clear upward trend, followed by stabilization. Both reported and adjusted total assets show a general increasing pattern over the five-year period. The analysis below details these observations.

Total Asset Turnover

The reported total asset turnover ratio increased significantly from 0.36 in 2021 to 0.67 in 2022. This indicates a substantial improvement in the efficiency with which assets were used to generate sales. Further increases were observed in subsequent years, reaching 0.76 in 2023 and stabilizing at 0.77 for both 2024 and 2025. This suggests that, after a period of rapid improvement, the company’s asset utilization efficiency has reached a plateau.

Asset Base

Reported total assets experienced a slight decrease from 68,175 million in 2021 to 67,358 million in 2022. However, assets then increased consistently through 2025, reaching 76,448 million. Adjusted total assets mirrored this pattern, remaining nearly identical to reported total assets throughout the period. The consistent alignment between reported and adjusted total assets suggests that any adjustments made do not materially impact the overall asset base.

Relationship between Turnover and Assets

The initial increase in asset turnover, concurrent with a slight decrease in total assets in 2022, suggests improved operational efficiency. The subsequent rise in both asset turnover and total assets from 2022 to 2025 indicates that the company was able to effectively deploy additional assets to generate increased sales, maintaining a high level of asset utilization. The stabilization of the turnover ratio in the final two years, despite continued asset growth, implies a consistent level of efficiency in asset management.

In summary, the company demonstrated a significant improvement in asset turnover between 2021 and 2023, followed by a period of sustained efficiency. The growth in total assets did not negatively impact the asset turnover ratio, indicating effective asset management practices.

An examination of the financial information reveals trends in both reported and adjusted financial leverage over a five-year period. Reported total assets experienced a slight decrease between 2021 and 2022, followed by consistent increases through 2025. Adjusted total assets mirrored this pattern, remaining identical to reported total assets from 2022 onward. Stockholders’ equity, both reported and adjusted, demonstrated a consistent upward trajectory throughout the period. However, the rate of increase accelerated from 2022 to 2025.

Reported Financial Leverage

Reported financial leverage exhibited a substantial decline from 13.56 in 2021 to 9.77 in 2022. This downward trend continued, albeit at a slower pace, reaching 7.63 in 2023, 5.84 in 2024, and ultimately 5.00 in 2025. This indicates a decreasing reliance on debt financing relative to reported equity.

Adjusted Financial Leverage

Adjusted financial leverage followed a similar pattern to its reported counterpart. It decreased from 15.45 in 2021 to 9.88 in 2022, then continued to decline to 7.17 in 2023, 5.20 in 2024, and 4.31 in 2025. The adjusted leverage ratio consistently remained higher than the reported leverage ratio, suggesting that adjustments to equity have a notable impact on the calculated leverage.

The convergence of reported and adjusted total assets beginning in 2022 suggests that the adjustments made to these figures ceased to have a material effect on total asset valuation. The consistent decrease in both reported and adjusted financial leverage indicates a strengthening financial position, characterized by a reduced proportion of debt relative to equity. The accelerating growth in stockholders’ equity likely contributed to this improvement in leverage ratios.

Relationship between Reported and Adjusted Leverage

The difference between reported and adjusted financial leverage narrowed over the period. While initially a difference of 1.89 in 2021, this decreased to 0.69 by 2025. This suggests that the adjustments made to stockholders’ equity had a diminishing impact on the overall financial leverage calculation as equity increased.

The period between 2021 and 2025 demonstrates a significant recovery and subsequent stabilization in profitability and returns, as evidenced by both reported and adjusted financial metrics. Net income transitioned from a substantial loss in 2021 to positive figures, increasing consistently through 2025. Stockholders’ equity also exhibited a strong upward trajectory over the same timeframe, indicating strengthening financial health.

Reported Return on Equity (ROE)

Reported ROE experienced a dramatic shift from -39.05% in 2021 to 10.69% in 2022, reflecting the recovery in reported net income. Further increases were observed in 2023 (28.08%) and 2024 (24.84%), before moderating slightly to 21.94% in 2025. This suggests initial rapid improvement followed by a period of more moderate, yet still positive, returns.

Adjusted Return on Equity (ROE)

Adjusted ROE mirrored the trend of reported ROE, moving from -58.28% in 2021 to 14.47% in 2022. The adjusted metric showed a higher peak in 2023 at 34.02%, then decreased to 28.65% in 2024 and 24.11% in 2025. The adjusted ROE consistently exceeded the reported ROE throughout the period, indicating that adjustments to net income and equity positively impact the return calculation.

Relationship between Reported and Adjusted ROE

The difference between reported and adjusted ROE narrowed from 19.23% in 2022 to 2.11% in 2025. This suggests that the impact of adjustments to net income and equity became less significant as the company’s core profitability improved. The initial large difference in 2022 highlights the substantial effect of these adjustments during the recovery phase.

Stockholders’ Equity Trends

Both reported and adjusted stockholders’ equity increased consistently throughout the period. Reported equity grew from US$5,029 million in 2021 to US$15,282 million in 2025, while adjusted equity increased from US$4,370 million to US$17,745 million. The consistent growth in equity provides a solid base for future profitability and supports the observed increases in ROE.

Net Income Trends

Reported net income moved from a loss of US$-1,964 million in 2021 to a profit of US$3,353 million in 2025. Adjusted net income followed a similar pattern, increasing from a loss of US$-2,547 million to a profit of US$4,278 million. The consistent growth in net income is the primary driver of the improvements in ROE.

In summary, the period under review demonstrates a strong turnaround in financial performance. Both reported and adjusted ROE improved significantly, driven by increasing net income and stockholders’ equity. While the rate of ROE growth moderated towards the end of the period, the overall trend indicates a strengthening financial position.

The period under review demonstrates a significant improvement in both reported and adjusted return on assets (ROA). Initially, the organization experienced a substantial loss, but profitability improved markedly over the five-year span. The adjusted ROA consistently exceeds the reported ROA, indicating the impact of adjustments made to net income and total assets.

Reported ROA

Reported ROA began at -2.88% in 2021, reflecting a net loss. A positive trend is then observed, increasing to 1.09% in 2022, 3.68% in 2023, and further to 4.25% in 2024. This upward trajectory continues into 2025, reaching 4.39%. The increase suggests improved profitability relative to total assets.

Adjusted ROA

Adjusted ROA follows a similar pattern to the reported ROA, but with more pronounced figures. Starting at -3.77% in 2021, it rises to 1.46% in 2022, 4.75% in 2023, 5.51% in 2024, and finally to 5.60% in 2025. The consistently higher adjusted ROA values suggest that the adjustments to net income and total assets positively impact the overall return on assets calculation.

Net Income (Reported & Adjusted)

Reported net income moved from a loss of US$1,964 million in 2021 to a profit of US$3,353 million in 2025. Adjusted net income shows a similar progression, starting from a loss of US$2,547 million in 2021 and increasing to US$4,278 million in 2025. The difference between reported and adjusted net income widens over time, indicating increasing adjustments.

Total Assets (Reported & Adjusted)

Reported total assets increased steadily from US$68,175 million in 2021 to US$76,448 million in 2025. Adjusted total assets show a similar trend, with a slight difference in 2021 and 2022, but converging with reported total assets from 2023 onwards. This suggests that the adjustments to total assets become less significant in later years.

In summary, the organization demonstrates a strong recovery and improving financial performance as evidenced by the increasing ROA figures. The adjustments to net income and total assets consistently result in a higher ROA, suggesting that these adjustments reflect underlying economic realities not fully captured in the reported figures. The consistent growth in total assets alongside increasing profitability indicates a healthy expansion of the organization’s operations.