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 Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Operating Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Analysis of Debt
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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 period under review demonstrates a significant fluctuation in economic profit. Initially negative, economic profit trends towards positive territory before declining again. Net operating profit after taxes (NOPAT) exhibits a clear recovery from substantial losses, while the cost of capital and invested capital show varying patterns. The interplay of these factors drives the observed changes in economic profit.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT experienced a dramatic improvement over the observed period. Beginning with a substantial loss of US$7,141 million in 2020, NOPAT moved to a loss of US$797 million in 2021. A positive turning point was reached in 2022 with a profit of US$2,682 million, which continued to grow to US$4,823 million in 2023 and further to US$5,148 million in 2024. This indicates a strengthening of core operational profitability.
- Cost of Capital
- The cost of capital fluctuated throughout the period. It began at 11.11% in 2020, decreased to 9.21% in 2021, and then increased to 10.36% in 2022 and 10.22% in 2023. A notable increase to 13.03% is observed in 2024, potentially reflecting changes in market conditions or the company’s risk profile. This increase in the cost of capital likely contributed to the decline in economic profit in the final year.
- Invested Capital
- Invested capital increased from US$46,438 million in 2020 to US$52,534 million in 2021. A decrease was then observed in 2022, falling to US$41,357 million, followed by an increase to US$45,532 million in 2023 and US$49,435 million in 2024. These fluctuations may be related to capital expenditure decisions, asset sales, or changes in working capital requirements.
- Economic Profit
- Economic profit mirrored the trends in NOPAT, initially displaying significant negative values. A loss of US$12,302 million was recorded in 2020, decreasing to US$5,634 million in 2021. The losses continued to narrow to US$1,604 million in 2022, before turning positive with a profit of US$169 million in 2023. However, economic profit declined again in 2024, resulting in a loss of US$1,293 million. This final decline is likely attributable to the combined effect of increasing cost of capital and continued investment.
In summary, the company demonstrated a substantial recovery in operational profitability, as evidenced by the increasing NOPAT. However, the economic profit trend was impacted by fluctuations in the cost of capital and invested capital, ultimately resulting in a negative economic profit in the most recent year. The increase in the cost of capital in 2024 appears to have been a significant factor in this outcome.
Net Operating Profit after Taxes (NOPAT)
United Airlines Holdings Inc., NOPAT calculation
US$ 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.
The economic spread ratio exhibited significant fluctuation over the five-year period. Initially negative, the ratio demonstrated improvement before declining again in the most recent year presented. Economic profit moved from substantial losses to a modest profit, then back to a loss, mirroring the trend in the economic spread ratio.
- Economic Spread Ratio
- The economic spread ratio began at -26.49% in 2020, indicating a substantial shortfall in returns relative to the cost of capital. A marked improvement was observed in 2021, with the ratio increasing to -10.72%. This positive trend continued into 2022, reaching -3.88%, suggesting a narrowing gap between returns and the cost of capital. In 2023, the ratio turned positive, reaching 0.37%, signifying that returns exceeded the cost of capital for the first time in the observed period. However, this improvement was not sustained, as the ratio decreased to -2.62% in 2024, indicating a return to returns falling short of the cost of capital.
- Economic Profit
- Economic profit followed a similar trajectory. A significant loss of US$12,302 million was recorded in 2020. This loss decreased substantially to US$5,634 million in 2021 and further to US$1,604 million in 2022. A profit of US$169 million was achieved in 2023, but this was followed by a loss of US$1,293 million in 2024. The magnitude of the losses decreased over time, but the return to a loss in the final year suggests potential challenges in maintaining profitability relative to invested capital.
- Invested Capital
- Invested capital increased from US$46,438 million in 2020 to US$52,534 million in 2021. A decrease was then observed in 2022, with invested capital falling to US$41,357 million. It subsequently rose to US$45,532 million in 2023 and further to US$49,435 million in 2024. The overall trend indicates a general increase in invested capital, despite the dip in 2022, which may be related to strategic adjustments or economic conditions.
The interplay between economic profit, invested capital, and the economic spread ratio suggests a volatile period. While improvements were made in closing the gap between returns and the cost of capital, the most recent year indicates a reversal of this trend. Continued monitoring of these metrics is warranted to assess the sustainability of profitability and the efficiency of capital allocation.
Economic Profit Margin
United Airlines Holdings Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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.
The economic profit margin exhibited significant fluctuations over the five-year period. Initially negative, the margin improved substantially before declining again in the most recent year presented. A clear progression from substantial losses to modest profitability, followed by a return to negative profitability, is evident.
- Economic Profit Margin Trend
- In 2020, the economic profit margin stood at -76.63%. This represents a considerable loss relative to adjusted operating revenue. A marked improvement occurred in 2021, with the margin increasing to -22.59%, indicating a reduction in the magnitude of the loss. This positive trend continued into 2022, where the margin further improved to -3.54%, approaching profitability. The year 2023 saw the margin turn positive for the first time, reaching 0.31%. However, this profitability was short-lived, as the margin decreased to -2.25% in 2024, signaling a return to negative economic profit.
The economic profit margin’s movement closely mirrors the trend in economic profit. The substantial losses in 2020 and 2021 were followed by diminishing losses in 2022, culminating in a small profit in 2023. The subsequent decline in the margin in 2024 suggests that while adjusted operating revenue continued to increase, the rise in costs or the required rate of return on capital outweighed the revenue gains.
- Relationship to Adjusted Operating Revenue
- Adjusted operating revenue increased consistently throughout the period, rising from US$16,054 million in 2020 to US$57,361 million in 2024. Despite this consistent revenue growth, the economic profit margin did not consistently improve, demonstrating that revenue increases alone do not guarantee improved economic profitability. The fluctuations in the margin indicate that factors beyond revenue, such as operating costs and the cost of capital, play a crucial role in determining economic profit.
The shift from negative to positive and back to negative economic profit margins highlights the sensitivity of profitability to underlying economic conditions and internal operational factors. The company experienced a period of recovery and modest profitability, but recent performance suggests challenges in sustaining that profitability despite continued revenue growth.