United Airlines Holdings Inc. (NASDAQ:UAL)

The period demonstrates a significant improvement in Return on Invested Capital (ROIC), moving from negative territory to a consistently positive and increasing return. This improvement is directly linked to substantial changes in both Net Operating Profit After Taxes (NOPAT) and Invested Capital.

Net Operating Profit After Taxes (NOPAT)

NOPAT experienced a dramatic shift from a loss of US$797 million in 2021 to a profit of US$2,682 million in 2022. This positive trend continued through 2023 and 2024, reaching US$4,823 million and US$5,148 million respectively. A further, albeit smaller, increase to US$5,340 million was observed in 2025. The substantial growth in NOPAT is the primary driver of the ROIC improvement.

Invested Capital

Invested Capital decreased from US$52,534 million in 2021 to US$41,357 million in 2022. Subsequently, it began to rise, reaching US$45,532 million in 2023, US$49,435 million in 2024, and US$50,212 million in 2025. While Invested Capital increased in the later years, it remained below the 2021 level throughout the analyzed period. The initial decrease in invested capital, coupled with the increase in NOPAT, contributed significantly to the initial jump in ROIC.

Return on Invested Capital (ROIC)

ROIC began at -1.52% in 2021, reflecting the negative NOPAT. A substantial increase to 6.49% was recorded in 2022, driven by the turnaround in NOPAT and the reduction in Invested Capital. The ROIC continued to improve, reaching 10.59% in 2023 and stabilizing at approximately 10.41% in 2024, before increasing slightly to 10.63% in 2025. The ROIC demonstrates a consistent and positive trend, indicating improved efficiency in capital allocation and profitability.

Overall, the period reflects a strong recovery and improvement in financial performance, as evidenced by the increasing ROIC. The growth in NOPAT appears to be the dominant factor, although the initial decrease in Invested Capital also played a role in the early stages of the recovery.

The period demonstrates a significant recovery and stabilization in financial performance, as evidenced by the decomposition of return on invested capital. Initially, the metrics reflect challenging conditions, followed by substantial improvement and a leveling off towards the end of the analyzed timeframe.

Operating Profit Margin (OPM)

The operating profit margin experienced a dramatic shift from a negative value of -1.70% in 2021 to 6.69% in 2022. This positive trend continued, reaching a peak of 9.41% in 2023, before stabilizing around 9.48% in 2024 and slightly decreasing to 9.36% in 2025. This indicates a substantial improvement in core operational profitability.

Turnover of Capital (TO)

The turnover of capital exhibited a consistent upward trajectory. Starting at 0.47 in 2021, it more than doubled to 1.10 in 2022. Further gains were observed in 2023, reaching 1.19, followed by a slight decrease to 1.16 in 2024 and a marginal increase to 1.18 in 2025. This suggests increasing efficiency in utilizing capital to generate revenue.

Effective Cash Tax Rate Adjustment (1 – CTR)

The adjustment for the effective cash tax rate began at 100.00% in 2021, then decreased to 88.41% in 2022, indicating an increased tax burden. This value then rose steadily to 94.63% in 2023, 94.71% in 2024, and further to 96.03% in 2025. This suggests a diminishing impact of tax benefits or credits over time.

Return on Invested Capital (ROIC)

The return on invested capital mirrored the improvements in the underlying components. It moved from -1.52% in 2021 to 6.49% in 2022, demonstrating a significant turnaround. The ROIC continued to increase, peaking at 10.59% in 2023, and then settled at 10.41% in 2024 and 10.63% in 2025. This indicates a strengthening ability to generate returns from invested capital.

The combined effect of improved operating profitability, increased capital efficiency, and a relatively stable tax rate adjustment resulted in a substantial and sustained increase in return on invested capital. While the rate of improvement slowed in the later years, the overall performance remained strong and stable.

The operating profit margin exhibited a significant positive trend over the observed period. Initially negative, the margin improved substantially and then stabilized at a high level. This improvement is directly correlated with a substantial increase in net operating profit before taxes and adjusted operating revenue.

Operating Profit Margin (OPM)

In 2021, the operating profit margin was -1.70%, indicating an operating loss. A dramatic increase was observed in 2022, with the OPM rising to 6.69%. This positive trend continued into 2023, reaching 9.41%. The margin experienced further, albeit smaller, gains in 2024, reaching 9.48%. A slight decrease to 9.36% was noted in 2025, but the margin remained at a strong level.

The progression from a negative operating profit margin to a consistently positive and relatively stable margin suggests a substantial improvement in the company’s operational efficiency and/or pricing power. The stabilization of the OPM in the later years indicates that the benefits of these improvements are being sustained, despite continued revenue growth.

Net Operating Profit Before Taxes (NOPBT) and Adjusted Operating Revenue Relationship

The substantial increase in NOPBT from -424 million in 2021 to 5,561 million in 2025 directly drove the improvement in the operating profit margin. Adjusted operating revenue also increased significantly, from 24,941 million in 2021 to 59,406 million in 2025. The consistent growth in both metrics suggests a strong operational recovery and expansion.

The relatively small fluctuation in the operating profit margin between 2024 and 2025, despite continued revenue growth, suggests that cost control measures are effectively managing increases in operating expenses. Further investigation into the components of operating expenses would provide a more detailed understanding of this dynamic.

The period under review demonstrates a significant shift in the turnover of capital. Initially, the metric was relatively low, but experienced substantial improvement before stabilizing. Adjusted operating revenue exhibited consistent growth throughout the period, while invested capital fluctuated.

Turnover of Capital (TO)

The turnover of capital ratio increased markedly from 0.47 in 2021 to 1.10 in 2022. This indicates a substantial improvement in the efficiency with which capital was used to generate revenue. Further increases were observed, reaching 1.19 in 2023. The ratio experienced a slight decrease to 1.16 in 2024, followed by a modest increase to 1.18 in 2025, suggesting a stabilization of capital utilization efficiency.

Adjusted Operating Revenue

Adjusted operating revenue showed consistent year-over-year growth. Revenue increased from US$24,941 million in 2021 to US$59,406 million in 2025. The largest single-year increase occurred between 2021 and 2022, reflecting a recovery and subsequent expansion of operations. Growth rates moderated in subsequent years, but remained positive.

Invested Capital

Invested capital decreased from US$52,534 million in 2021 to US$41,357 million in 2022. It then increased to US$45,532 million in 2023, and continued to rise to US$49,435 million in 2024, before reaching US$50,212 million in 2025. This suggests a period of capital restructuring followed by reinvestment and moderate expansion.

The combined effect of increasing revenue and fluctuating invested capital resulted in the observed trend in the turnover of capital ratio. The initial increase in TO suggests improved operational efficiency and a more effective use of capital. The subsequent stabilization indicates that the company has reached a point where further significant gains in capital efficiency may be more challenging to achieve without substantial changes in operational strategy or capital allocation.

The effective cash tax rate exhibited a fluctuating pattern over the observed period. Initial values are unavailable for 2021, but a significant increase is noted in 2022, followed by a decline through 2025.

Effective Cash Tax Rate (CTR)

The CTR began at 11.59% in 2022. This represents the proportion of pre-tax profits paid as cash taxes. A substantial decrease to 5.37% occurred in 2023, and this downward trend continued, albeit at a slower pace, to 5.29% in 2024. By 2025, the CTR further decreased to 3.97%.

The decrease in the CTR from 2022 to 2025 coincides with increasing net operating profit before taxes (NOPBT). While cash operating taxes decreased over the period, the rate of decrease was less than the rate of increase in NOPBT, resulting in the declining CTR. The relationship between cash operating taxes and NOPBT suggests potential benefits from tax planning strategies or changes in the tax code impacting the company’s tax obligations.

Cash operating taxes decreased from US$352 million in 2022 to US$221 million in 2025. This reduction, coupled with the increasing NOPBT, is the primary driver of the observed decline in the effective cash tax rate.