Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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United Airlines Holdings Inc. pages available for free this week:
- Common-Size Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Analysis of Debt
- Aggregate Accruals
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Economic Profit
United Airlines Holdings Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial performance over the reviewed periods depicts a notable recovery in profitability and fluctuations in capital costs and invested capital.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a significant turnaround from a substantial loss of -7141 million USD at the end of 2020 to positive profitability beginning in 2022. After the losses in 2020 and 2021, reaching -797 million USD, the company achieved positive NOPAT values of 2682 million USD in 2022, which further increased to 4823 million USD in 2023 and then slightly to 5148 million USD in 2024. This trend suggests improving operating efficiency and profitability over the most recent years.
- Cost of Capital
- The cost of capital showed some variability across the years. It decreased from 9.95% in 2020 to 8.26% in 2021, then edged up slightly to 9.26% in 2022 and 9.19% in 2023. A more significant increase occurred in 2024, reaching 11.35%. This increase may indicate a higher perceived risk or changes in market conditions affecting the company’s financing costs.
- Invested Capital
- Invested capital rose from 46,438 million USD at year-end 2020 to a peak of 52,534 million USD in 2021. It then declined markedly to 41,357 million USD in 2022, followed by consecutive increases to 45,532 million USD in 2023 and 49,435 million USD in 2024. This fluctuation may reflect adjustments in asset base or capital expenditures and disposals, indicating variability in investment strategies or operational focus.
- Economic Profit
- Economic profit, which measures value creation over the cost of capital, followed a trajectory aligning with operational results but remained negative for most of the periods. It recorded heavy losses of -11,762 million USD in 2020 and -5,139 million USD in 2021. The losses decreased substantially by 2022 to -1,149 million USD and turned positive in 2023 with 640 million USD. However, in 2024, economic profit reverted to a slight negative value of -465 million USD. Despite improvements, this indicates that the company only briefly created economic value above its cost of capital in the latest period and faces challenges in sustaining this consistently.
Net Operating Profit after Taxes (NOPAT)
United Airlines Holdings Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in frequent flyer deferred revenue.
3 Addition of increase (decrease) in equity equivalents to net income (loss).
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2024 Calculation
Tax benefit of interest expense, net of interest capitalized = Adjusted interest expense, net of interest capitalized × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income (loss).
7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
The financial data reflects a significant recovery and improvement in profitability over the five-year period.
- Net income (loss)
- There is a clear trend of substantial reduction in net losses followed by consistent positive net income. Initially, the company reported a large net loss of $7,069 million in 2020. This loss narrowed considerably to $1,964 million in 2021, marking a notable improvement. In 2022, the company shifted to profitability with a positive net income of $737 million, which further increased to $2,618 million in 2023 and $3,149 million in 2024. This progression indicates a strong turnaround in the company’s bottom line over the period.
- Net operating profit after taxes (NOPAT)
- The NOPAT figures corroborate the improvement observed in net income, displaying a similar trajectory. Starting from a negative $7,141 million in 2020, NOPAT improved substantially to a negative $797 million in 2021. By 2022, it became positive at $2,682 million, followed by consistent growth to $4,823 million in 2023 and $5,148 million in 2024. This upward trend suggests that the company's core operations have become increasingly profitable after accounting for taxes, highlighting enhanced operational efficiency and recovery.
Overall, the data indicates a pronounced recovery from the substantial losses experienced in 2020, transitioning into increasing profitability from 2022 onward. Both net income and NOPAT demonstrate sustained positive momentum, which is indicative of improved financial health and operating performance over the analyzed period.
Cash Operating Taxes
United Airlines Holdings Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
- Income Tax Expense (Benefit)
- The income tax expense experienced significant fluctuations over the five-year period. In 2020, a substantial tax benefit of -$1,753 million was recorded, indicating a tax credit or loss carryback. This benefit decreased in magnitude in 2021 to -$593 million. Starting in 2022, the expense shifted to a positive figure of $253 million, reflecting a transition from tax benefit to tax expense. This positive expense continued to increase in 2023 and 2024, reaching $769 million and $1,019 million respectively, suggesting a growing tax liability correlating potentially with improved profitability or changed tax circumstances.
- Cash Operating Taxes
- Cash operating taxes demonstrated a generally stable pattern with slight fluctuations. There was an increase from $246 million in 2020 to $374 million in 2021, followed by a slight decrease to $352 million in 2022. The amount further declined to $274 million in 2023 before experiencing a modest rise to $288 million in 2024. Overall, cash operating taxes remained within a relatively narrow range, reflecting consistent operational tax cash outflows despite varying income tax expense trends.
Invested Capital
United Airlines Holdings Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of frequent flyer deferred revenue.
4 Addition of equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of short-term investments.
- Total reported debt & leases
- The total reported debt and leases increased significantly from 33,909 million USD in 2020 to a peak of 41,063 million USD in 2021. Following this peak, there was a gradual decline over the subsequent years, reaching 33,633 million USD by the end of 2024. This trend indicates a reduction effort in debt and lease obligations after the initial growth, suggesting an improvement in leverage or debt management policy.
- Stockholders’ equity
- Stockholders’ equity showed a decreasing trend from 5,960 million USD in 2020 to 5,029 million USD in 2021, indicating a possible decline in net assets or profitability during that period. However, from 2021 onwards, equity grew strongly, reaching 12,675 million USD in 2024. This consistent increase suggests improved retained earnings, equity financing, or asset revaluation, reflecting a strengthening capital base over time.
- Invested capital
- Invested capital rose from 46,438 million USD in 2020 to a high of 52,534 million USD in 2021, followed by a sharp decrease to 41,357 million USD in 2022. After this decline, there was a recovery trend with invested capital increasing to 49,435 million USD by 2024. This fluctuation may be associated with asset sales, restructuring, or changes in working capital, before stabilizing and growing again in the final years analyzed.
Cost of Capital
United Airlines Holdings Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, finance leases, and other financial liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, finance leases, and other financial liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, finance leases, and other financial liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, finance leases, and other financial liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, finance leases, and other financial liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, finance leases, and other financial liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, finance leases, and other financial liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, finance leases, and other financial liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, finance leases, and other financial liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, finance leases, and other financial liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
United Airlines Holdings Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Parcel Service Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit shows a marked improvement from a significant loss of $11,762 million in 2020 to a near break-even positive value of $640 million in 2023, followed by a return to a loss of $465 million in 2024. This trend indicates a strong recovery phase starting from 2020 through 2023, but the slight decline in 2024 suggests challenges in maintaining profitability beyond that year.
- Invested Capital
- The invested capital experienced an increase from $46,438 million in 2020 to a peak of $52,534 million in 2021, followed by a sharp reduction to $41,357 million in 2022. After 2022, there was a gradual uptick to $49,435 million by 2024. This pattern suggests significant asset divestment or depreciation in 2022 with subsequent reinvestment or asset growth over the following two years.
- Economic Spread Ratio
- The economic spread ratio shows a progressive narrowing of negative values from -25.33% in 2020 to -2.78% in 2022, crossing into positive territory at 1.41% in 2023, before slightly declining to -0.94% in 2024. This trend reflects improving returns on invested capital relative to the cost of capital, peaking in 2023, but indicating a marginal reduction in economic profitability efficiency in 2024.
- Overall Summary
- The data depict a significant recovery in economic performance during the period, with losses narrowing substantially and briefly achieving positive economic profit and spread in 2023. The fluctuations in invested capital imply strategic adjustments in asset base, possibly in response to operational and market conditions. The reversion to slight negative figures in 2024 for both economic profit and spread suggests emerging challenges in maintaining the improved financial performance achieved in the prior year.
Economic Profit Margin
United Airlines Holdings Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Operating revenue | ||||||
| Add: Increase (decrease) in frequent flyer deferred revenue | ||||||
| Adjusted operating revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Parcel Service Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted operating revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The company’s economic profit shows a clear improvement trend from 2020 to 2023, moving from a substantial loss of -11,762 million US dollars in 2020 to a positive value of 640 million in 2023. However, in 2024, the economic profit decreases slightly to -465 million, indicating a setback after the previous year’s positive performance.
- Adjusted Operating Revenue
- There is a consistent and significant growth in adjusted operating revenue over the five-year period. The revenue increases from 16,054 million US dollars in 2020 to 57,361 million in 2024, with particularly strong growth between 2021 and 2022, and continuing through to 2024.
- Economic Profit Margin
- The economic profit margin demonstrates a marked recovery trend over the period, improving from a negative margin of -73.27% in 2020 to a positive 1.18% in 2023. Yet, similar to economic profit, the margin declines slightly in 2024 to -0.81%, suggesting some challenges affecting profitability despite strong revenue gains.
- Overall Analysis
- The data indicates a period of recovery and growth following significant losses in economic profit in 2020. The company has achieved substantial revenue growth, which contributed to improving profitability metrics through 2023. Nonetheless, the slight downturn in economic profit and margin in 2024 warrants attention to understand the underlying causes and to ensure sustainable profitability despite the upward revenue trajectory.