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.
Economic Profit
United Airlines Holdings Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 5,340 – 13.21% × 50,212 = -1,292
The financial trajectory from 2021 to 2025 reflects a period of operational recovery followed by increasing pressure from the cost of capital. While operational profitability showed consistent growth, the ability to generate economic value has been constrained by rising capital costs and an expanding capital base.
- Net Operating Profit After Taxes (NOPAT)
- A strong upward trend in operational profitability is evident. NOPAT moved from a negative position of 797 million USD in 2021 to a positive 5.34 billion USD by 2025. This represents a significant turnaround and sustained growth in the company's core operating performance over the five-year period.
- Cost of Capital
- The cost of capital exhibits a general upward trajectory, beginning at 8.72% in 2021 and reaching 13.21% by 2025. A notable acceleration in this rate is observed between 2023 and 2025, where the cost rose from 9.69% to 13.21%, increasing the threshold of return required to create economic value.
- Invested Capital
- Invested capital experienced an initial contraction in 2022, dropping to 41.36 billion USD from 52.53 billion USD in 2021. Following this decline, a steady increase was observed, with capital reaching 50.21 billion USD by 2025, indicating a period of reinvestment into the business.
- Economic Profit
- Economic profit demonstrates a volatile pattern. After significant losses in 2021 and 2022, the company achieved a positive economic profit of 412 million USD in 2023. However, this trend reversed in 2024 and 2025, with economic profit falling to -865 million USD and -1.29 billion USD, respectively. This deterioration occurred despite the growth in NOPAT, suggesting that the increase in the cost of capital and the rise in invested capital outweighed the operational gains.
Overall, the analysis indicates that while the company successfully restored and grew its operating profits, the rising cost of funding and the expansion of the capital base have eroded economic value creation in the latter part of the period.
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Net Operating Profit after Taxes (NOPAT)
United Airlines Holdings Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 6,048 × 6.00% = 363
5 2025 Calculation
Tax benefit of interest expense, net of interest capitalized = Adjusted interest expense, net of interest capitalized × Statutory income tax rate
= 1,530 × 21.00% = 321
6 Addition of after taxes interest expense to net income (loss).
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 611 × 21.00% = 128
8 Elimination of after taxes investment income.
Net operating profit after taxes (NOPAT) demonstrates a significant improvement over the observed period. Beginning with a negative value in 2021, NOPAT exhibits consistent growth through 2025. This positive trajectory contrasts with the initial net income performance, indicating a strengthening of core operational profitability relative to tax obligations.
- NOPAT Trend
- In 2021, NOPAT registered at -797 US$ millions, representing a loss. A substantial increase is then observed in 2022, with NOPAT reaching 2,682 US$ millions. This positive trend continues into 2023, where NOPAT further increases to 4,823 US$ millions. The growth rate moderates slightly in 2024, with NOPAT reaching 5,148 US$ millions, and continues at a similar pace in 2025, reaching 5,340 US$ millions.
The magnitude of the increase in NOPAT from 2021 to 2022 is particularly noteworthy. While net income also improved during this period, the NOPAT increase suggests improvements in operational efficiency and profitability beyond simply accounting for tax effects. The consistent positive NOPAT values from 2022 onwards indicate a sustained ability to generate profit from core operations after accounting for taxes.
- Relationship to Net Income
- While both net income and NOPAT show improvement over the period, NOPAT consistently exceeds net income in 2022, 2023, 2024, and 2025. This difference suggests the presence of significant non-operating items or accounting adjustments impacting net income. The divergence between the two metrics warrants further investigation to understand the underlying drivers of these differences.
The sustained growth in NOPAT from 2022 to 2025 suggests effective management of operational costs and revenue generation. The incremental increases in NOPAT in the later years, while positive, indicate a potential slowing of growth momentum, which may require further analysis to determine its sustainability.
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Cash Operating Taxes
United Airlines Holdings Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
The relationship between income tax expense and cash operating taxes demonstrates notable fluctuations over the five-year period. Income tax expense exhibits a significant swing from a benefit in 2021 to positive expenses in subsequent years, while cash operating taxes show a more moderate, generally decreasing trend.
- Income Tax Expense
- Income tax expense initially registered as a benefit of US$593 million in 2021. This shifted dramatically to an expense of US$253 million in 2022, followed by increases to US$769 million in 2023 and US$1,019 million in 2024. A slight decrease is observed in 2025, with income tax expense reported at US$953 million. This pattern suggests a changing profitability profile and/or tax rate environment.
- Cash Operating Taxes
- Cash operating taxes began at US$374 million in 2021, decreasing to US$352 million in 2022. A more pronounced decline occurred in 2023, falling to US$274 million, before a modest increase to US$288 million in 2024. The trend continues downward in 2025, with cash operating taxes reported at US$221 million. This indicates a reduction in actual cash outflows related to operations-based taxes.
The divergence between income tax expense and cash operating taxes is substantial. While income tax expense increased significantly from 2021 to 2024, cash operating taxes generally decreased. This discrepancy could be attributed to several factors, including deferred tax assets/liabilities, changes in tax credits utilized, or differences between accounting and tax depreciation methods. The reduction in cash operating taxes, despite rising income tax expense, may positively impact free cash flow.
- Relationship between Metrics
- In 2021, the income tax benefit significantly exceeded cash operating taxes. As income tax expense became positive, the difference between the two metrics narrowed. By 2025, income tax expense remained considerably higher than cash operating taxes, suggesting a growing reliance on non-cash tax benefits or timing differences in tax payments.
Further investigation into the components of income tax expense and the nature of the differences between income tax expense and cash operating taxes is recommended to fully understand the underlying drivers of these trends.
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Invested Capital
United Airlines Holdings Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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.
The composition of invested capital at the company exhibits notable fluctuations over the five-year period. Total reported debt & leases generally decreased, while stockholders’ equity consistently increased. These movements have a combined effect on the overall invested capital, which initially decreased before showing signs of stabilization and modest growth.
- Total Reported Debt & Leases
- A consistent downward trend is observed in total reported debt & leases, decreasing from US$41,063 million in 2021 to US$31,036 million in 2025. The most significant reduction occurred between 2021 and 2022, with a decrease of US$3,763 million. Subsequent annual decreases were more moderate, suggesting a slowing rate of debt reduction.
- Stockholders’ Equity
- Stockholders’ equity demonstrates a clear upward trajectory throughout the period. Beginning at US$5,029 million in 2021, it increased to US$15,282 million by 2025. The rate of growth accelerated over time, with the largest annual increase occurring between 2023 and 2024 (US$3,351 million). This indicates increasing retained earnings and/or capital contributions.
- Invested Capital
- Invested capital initially decreased from US$52,534 million in 2021 to US$41,357 million in 2022, primarily driven by the substantial reduction in debt. It then experienced a moderate increase, reaching US$45,532 million in 2023, before continuing to rise to US$50,212 million in 2025. The stabilization and subsequent growth in invested capital suggest a shift in the company’s capital structure, with equity gains partially offsetting the decline in debt. The increase between 2024 and 2025 was relatively small, at US$777 million.
The interplay between decreasing debt and increasing equity suggests a strengthening financial position. While the initial decrease in invested capital might have raised concerns, the subsequent stabilization and modest growth indicate a more balanced and potentially sustainable capital structure.
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Cost of Capital
United Airlines Holdings Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 35,351) | 35,351) | ÷ | 66,611) | = | 0.53 | 0.53 | × | 20.80% | = | 11.04% | ||
| Long-term debt, finance leases, and other financial liabilities3 | 25,212) | 25,212) | ÷ | 66,611) | = | 0.38 | 0.38 | × | 5.82% × (1 – 21.00%) | = | 1.74% | ||
| Operating lease liability4 | 6,048) | 6,048) | ÷ | 66,611) | = | 0.09 | 0.09 | × | 6.00% × (1 – 21.00%) | = | 0.43% | ||
| Total: | 66,611) | 1.00 | 13.21% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | 30,171) | 30,171) | ÷ | 63,574) | = | 0.47 | 0.47 | × | 20.80% | = | 9.87% | ||
| Long-term debt, finance leases, and other financial liabilities3 | 28,426) | 28,426) | ÷ | 63,574) | = | 0.45 | 0.45 | × | 5.46% × (1 – 21.00%) | = | 1.93% | ||
| Operating lease liability4 | 4,977) | 4,977) | ÷ | 63,574) | = | 0.08 | 0.08 | × | 5.90% × (1 – 21.00%) | = | 0.36% | ||
| Total: | 63,574) | 1.00 | 12.16% | ||||||||||
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 | 14,922) | 14,922) | ÷ | 50,888) | = | 0.29 | 0.29 | × | 20.80% | = | 6.10% | ||
| Long-term debt, finance leases, and other financial liabilities3 | 30,887) | 30,887) | ÷ | 50,888) | = | 0.61 | 0.61 | × | 6.53% × (1 – 21.00%) | = | 3.13% | ||
| Operating lease liability4 | 5,079) | 5,079) | ÷ | 50,888) | = | 0.10 | 0.10 | × | 5.80% × (1 – 21.00%) | = | 0.46% | ||
| Total: | 50,888) | 1.00 | 9.69% | ||||||||||
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 | 16,024) | 16,024) | ÷ | 51,501) | = | 0.31 | 0.31 | × | 20.80% | = | 6.47% | ||
| Long-term debt, finance leases, and other financial liabilities3 | 30,457) | 30,457) | ÷ | 51,501) | = | 0.59 | 0.59 | × | 6.21% × (1 – 21.00%) | = | 2.90% | ||
| Operating lease liability4 | 5,020) | 5,020) | ÷ | 51,501) | = | 0.10 | 0.10 | × | 5.50% × (1 – 21.00%) | = | 0.42% | ||
| Total: | 51,501) | 1.00 | 9.80% | ||||||||||
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 | 15,397) | 15,397) | ÷ | 57,647) | = | 0.27 | 0.27 | × | 20.80% | = | 5.55% | ||
| Long-term debt, finance leases, and other financial liabilities3 | 36,542) | 36,542) | ÷ | 57,647) | = | 0.63 | 0.63 | × | 5.54% × (1 – 21.00%) | = | 2.77% | ||
| Operating lease liability4 | 5,708) | 5,708) | ÷ | 57,647) | = | 0.10 | 0.10 | × | 5.00% × (1 – 21.00%) | = | 0.39% | ||
| Total: | 57,647) | 1.00 | 8.72% | ||||||||||
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 »
Economic Spread Ratio
United Airlines Holdings Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (1,292) | (865) | 412) | (1,369) | (5,378) | |
| Invested capital2 | 50,212) | 49,435) | 45,532) | 41,357) | 52,534) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -2.57% | -1.75% | 0.91% | -3.31% | -10.24% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| FedEx Corp. | -6.78% | -7.97% | -6.50% | -6.13% | -3.58% | |
| Uber Technologies Inc. | 14.08% | 6.22% | -3.60% | -73.60% | -22.77% | |
| Union Pacific Corp. | -2.58% | -3.25% | -3.35% | -1.44% | -2.30% | |
| United Parcel Service Inc. | -2.39% | -1.94% | 0.77% | 11.75% | 17.57% | |
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -1,292 ÷ 50,212 = -2.57%
4 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 is characterized by a period of sharp recovery followed by a secondary decline in value creation. The overall trend indicates a volatile capacity to generate returns exceeding the cost of capital.
- Economic Profit Performance
- A substantial recovery was observed between 2021 and 2023, during which economic profit rose from a deficit of US$ 5,378 million to a positive value of US$ 412 million. This positive inflection point was temporary, as economic profit shifted back into negative territory in 2024 and 2025, ending the period at US$ -1,292 million.
- Invested Capital Movements
- Invested capital saw a significant reduction in 2022, falling to US$ 41,357 million from US$ 52,534 million in 2021. Subsequently, a steady expansion of the capital base occurred over the following three years, with invested capital increasing consecutively to reach US$ 50,212 million by December 31, 2025.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrored the trend of economic profit, improving from -10.24% in 2021 to a peak of 0.91% in 2023. This 2023 peak represents the only instance in the analyzed period where the company achieved a positive spread, indicating a brief period of value creation. However, the ratio deteriorated to -1.75% in 2024 and -2.57% in 2025, signaling that the return on invested capital once again fell below the cost of capital.
The convergence of increasing invested capital and a declining economic spread ratio between 2023 and 2025 suggests that the additional capital deployed did not generate proportional economic gains, leading to a consistent erosion of economic value in the final two years of the period.
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Economic Profit Margin
United Airlines Holdings Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (1,292) | (865) | 412) | (1,369) | (5,378) | |
| Operating revenue | 59,070) | 57,063) | 53,717) | 44,955) | 24,634) | |
| Add: Increase (decrease) in frequent flyer deferred revenue | 336) | 298) | 468) | 393) | 307) | |
| Adjusted operating revenue | 59,406) | 57,361) | 54,185) | 45,348) | 24,941) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -2.18% | -1.51% | 0.76% | -3.02% | -21.56% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| FedEx Corp. | -5.42% | -6.39% | -5.01% | -4.36% | -2.74% | |
| Uber Technologies Inc. | 4.27% | 2.11% | -1.51% | -37.73% | -20.97% | |
| Union Pacific Corp. | -6.71% | -8.32% | -8.55% | -3.46% | -6.15% | |
| United Parcel Service Inc. | -1.37% | -1.03% | 0.38% | 5.24% | 8.02% | |
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted operating revenue
= 100 × -1,292 ÷ 59,406 = -2.18%
3 Click competitor name to see calculations.
An analysis of the financial performance between 2021 and 2025 reveals a period of significant revenue growth contrasted by volatility in economic profitability. While the scale of operations expanded consistently, the ability to generate value above the cost of capital remained inconsistent, peaking in 2023 before entering a downward trajectory.
- Adjusted Operating Revenue Trends
- A strong and consistent upward trend in adjusted operating revenue is observed, increasing from 24,941 million US$ in 2021 to 59,406 million US$ by 2025. The most substantial growth occurred between 2021 and 2022, where revenue nearly doubled, signaling a rapid expansion in operational scale.
- Economic Profit Volatility
- Economic profit exhibited a sharp recovery phase followed by a reversal. A significant deficit of -5,378 million US$ in 2021 improved substantially to a positive value of 412 million US$ by 2023. However, this momentum was not sustained, as economic profit returned to negative territory in 2024 (-865 million US$) and further deteriorated to -1,292 million US$ in 2025.
- Economic Profit Margin Trajectory
- The economic profit margin mirrored the volatility of the absolute profit figures. The margin recovered from a low of -21.56% in 2021 to a peak of 0.76% in 2023, indicating a brief period where the entity generated returns exceeding its cost of capital. This was followed by a gradual decline to -1.51% in 2024 and -2.18% in 2025.
- Correlation Between Revenue and Value Creation
- A divergence is noted between revenue growth and economic value creation in the final two years of the period. Despite adjusted operating revenue continuing to rise through 2024 and 2025, economic profit and the corresponding margin declined. This suggests that the incremental revenue growth was insufficient to offset the increasing costs of capital or operating expenses required to sustain that growth.
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