Delta Air Lines Inc. (NYSE:DAL)

The analysis of the annual current and deferred income tax expenses indicates notable fluctuations and trends over the five-year period.

Current Tax Provision (Benefit)

The current tax provision displayed significant volatility. In 2017, there was a positive current tax provision of 53 million USD. This shifted to a substantial benefit (negative provision) of -148 million USD in 2018, followed by another benefit of -42 million USD in 2019. The benefit deepened in 2020 to -92 million USD but reversed sharply to a small positive provision of 4 million USD in 2021. This pattern suggests variability in the company’s immediate tax obligations, influenced by changes in taxable income or tax strategies that impacted reported current taxes.

Deferred Tax Provision

Deferred tax provisions showed large swings, beginning with a high charge of 2071 million USD in 2017, which then decreased to 1364 million USD in 2018. It increased slightly to 1473 million USD in 2019 before turning negative to -3110 million USD in 2020, indicating a significant deferred tax benefit. In 2021, the figure reverted to a smaller positive provision of 114 million USD. The sharp decline in 2020 suggests the recognition of substantial deferred tax assets or adjustments possibly related to changes in tax laws, accounting estimates, or expected future profitability.

Income Tax Provision (Benefit)

The overall income tax provision mirrors the combined effect of the current and deferred components. It started high at 2124 million USD in 2017, then dropped to 1216 million USD in 2018. There was a modest rise to 1431 million USD in 2019, followed by a pronounced benefit of -3202 million USD in 2020. In 2021, the provision again shifted to a small charge of 118 million USD. The dramatic reversal in 2020 highlights a year marked by significant tax benefits, likely driven by deferred tax factors, which outweighed current tax charges and led to an overall tax benefit rather than an expense.

Overall, the data reflects a complex tax situation with pronounced variability, particularly in deferred tax provisions. The year 2020 stands out as an unusual period with a substantial deferred tax benefit contributing to a net income tax benefit, possibly related to extraordinary events or changes in tax regulation. In contrast, other years show more consistent but fluctuating tax expenses with moderate current tax charges and predominantly positive deferred tax provisions.

U.S. Federal Statutory Income Tax Rate

The statutory income tax rate shows a significant decline from 35% in 2017 to a consistent 21% from 2018 through 2021. This reduction reflects a structural change likely linked to tax legislation adjustments.

State Taxes, Net of Federal Benefit

State taxes, net of federal benefit, generally exhibited minor fluctuations around 2% from 2017 to 2020, rising slightly from 1.8% to 2.5% in 2018 and then declining to 1.9% in 2020. However, there is a marked deviation in 2021 with a negative rate of -4.4%, indicating a reversal or recovery effect that reduced the overall tax burden in that year.

Permanent Differences

This item was unreported for 2017 and 2018 but then showed negative values in 2019 (-0.3%) and 2020 (-0.6%), followed by a significant positive jump to 4.9% in 2021. The increase in 2021 suggests an unusual or one-time adjustment impacting taxable income.

Valuation Allowance

While absent in 2017 and 2018, valuation allowance impacts appeared starting in 2019 with 0.7%, turned negative to -2.6% in 2020, indicating a potential release of allowance, and surged to 9.1% in 2021, reflecting a substantial increase in valuation allowance or a related adjustment affecting the tax rate.

Other Components

The 'Other' category fluctuated near zero, starting with a negative -2.2% in 2017, then positive in 2018 (0.6%), slightly negative again in 2019 (-0.6%), positive in 2020 (0.8%), and again negative in 2021 (-0.8%). These minor oscillations suggest small, varying adjustments impacting the effective tax rate.

Effective Income Tax Rate, Before TCJA Adjustment

This rate decreased notably from 34.6% in 2017 to 24.1% in 2018, and further declined to 23.1% in 2019 and 20.5% in 2020. However, it rebounded to 29.8% in 2021, indicating a partial reversal of the downward trend observed in prior years.

Tax Cuts and Jobs Act (TCJA) Adjustment

The TCJA adjustment was positive at 2.6% in 2017, followed by a small negative adjustment of -0.5% in 2018, and absent in subsequent years, reflecting the one-time effects associated with the tax reform implementation period.

Effective Income Tax Rate

The overall effective income tax rate mirrored the trends before TCJA adjustment, starting high at 37.2% in 2017, then sharply decreasing to 23.6% in 2018, remaining steady at 23.1% in 2019, slipping further to 20.5% in 2020, and rising again to 29.8% in 2021. The rate’s decrease from 2017 to 2020 aligns with statutory tax rate reductions and tax reform impacts, whereas the increase in 2021 suggests emergence of additional tax liabilities or adjustments, possibly linked to valuation allowance and permanent differences changes.

Net Operating Loss and Capital Loss Carryforwards

The net operating loss carryforwards experienced fluctuations, starting at 1440 million USD in 2017, declining to 560 million USD by 2019, then sharply increasing to 1495 million USD in 2020 before slightly decreasing to 1301 million USD in 2021. Capital loss carryforwards appeared only in 2020 and 2021, with amounts of 483 million USD and 480 million USD respectively, indicating a recent recognition of capital losses.

Pension, Postretirement, and Other Benefits

This liability showed a decreasing trend overall, from 2545 million USD in 2017 to 2089 million USD in 2021, with a peak in 2020 at 2956 million USD. The spike in 2020 suggests an increased obligation during that year, possibly due to changes in actuarial assumptions or market conditions, followed by a decline in 2021.

Investments

Investment values were absent prior to 2021, where an amount of 314 million USD was recorded, indicating the initiation or recognition of investment assets in that period.

Deferred Revenue

There was a consistent upward trajectory in deferred revenue from 1024 million USD in 2017 to 2288 million USD in 2021. This suggests an increasing volume of advance payments or unearned revenue over the years, reflecting business growth or changes in customer payment patterns.

Lease Liabilities and Operating Lease Assets

Lease liabilities appeared in 2018 at 1579 million USD and grew steadily to 2452 million USD by 2021, indicating increased lease obligations. Correspondingly, operating lease assets were negative, ranging from -1388 million USD in 2018 to -1676 million USD in 2021, potentially due to accounting for leased assets following lease standard changes.

Other Items

Two rows labeled 'Other' with positive and negative values showed variability. The positive 'Other' decreased markedly from 1125 million USD in 2017 to 494 million USD in 2021, with some fluctuations in between. The negative 'Other' ranged between -174 million USD and -55 million USD, showing less variability but a notable decrease in negative impact by 2021.

Deferred Tax Assets and Valuation Allowance

Deferred tax assets before valuation allowance increased from 6134 million USD in 2017 to peak at 9527 million USD in 2020, slightly declining to 9418 million USD in 2021. The valuation allowance increased in negative magnitude from -19 million USD in 2017 to -833 million USD in 2021, suggesting greater skepticism over realizability of deferred tax assets. Despite this, net deferred tax assets grew from 6115 million USD to a peak of 9067 million USD in 2020, then declined somewhat to 8585 million USD in 2021.

Depreciation and Intangible Assets

Depreciation expenses were consistently negative, increasing in absolute value from -3936 million USD in 2017 to a peak of -5190 million USD in 2019, then decreasing to -4463 million USD by 2021, indicating changes in asset base or depreciation methods. Intangible assets showed a slight increase in negative value, from -1070 million USD in 2017 to -1097 million USD in 2021, denoting relatively stable intangible asset levels.

Deferred Tax Liabilities and Net Deferred Tax Position

Deferred tax liabilities increased in absolute negative terms from -5180 million USD in 2017 to -7291 million USD in 2021, indicating rising tax obligations. Net deferred tax assets (liabilities) exhibited volatility, starting at a positive 935 million USD in 2017, dropping to a negative -1336 million USD in 2019, then rebounding to positive territory at 1988 million USD in 2020 and 1294 million USD in 2021, reflecting shifts in tax position and temporary differences.

The financial data indicates significant fluctuations in deferred tax assets and liabilities over the five-year period ending December 31, 2021.

Deferred Tax Assets

Deferred tax assets initially declined sharply from 935 million US dollars in 2017 to 242 million in 2018, followed by a continued decrease to 120 million in 2019. This downward trend reversed markedly in 2020 when deferred tax assets surged to 1,988 million, representing a substantial increase. In 2021, the deferred tax assets decreased again to 1,295 million but remained well above the levels observed in 2017 through 2019.

Deferred Tax Liabilities

Deferred tax liabilities were not reported in 2017; in 2018, they started at 163 million US dollars and increased dramatically to 1,456 million in 2019. However, no values are recorded for 2020 and 2021, making it difficult to assess trends beyond 2019. The available data suggests a sharp rise in deferred tax liabilities up to 2019, which contrasts with the erratic pattern observed in deferred tax assets.

Overall, the pattern of deferred tax assets reveals volatility but demonstrates a strong recovery in 2020. Deferred tax liabilities increased considerably through 2019 but lack data in subsequent years for analysis. This mixed movement between assets and liabilities may reflect changes in tax positions, timing differences, or impacts of external factors affecting taxable income and deductible temporary differences over the analyzed period.

Asset Trends

Both reported and adjusted total assets show a consistent upward trend from 2017 to 2021. Reported total assets increased from approximately $53.3 billion in 2017 to about $72.5 billion in 2021, while adjusted total assets grew from approximately $52.4 billion to $71.2 billion in the same period. The gap between reported and adjusted total assets remains relatively stable, indicating minor adjustments over time.

Liability Analysis

Reported liabilities display a noticeable increase especially in 2020, moving from roughly $49.2 billion in 2019 to about $70.5 billion in 2020, before decreasing slightly to $68.6 billion in 2021. Adjusted liabilities follow a similar pattern but are consistently slightly lower than reported liabilities except in 2020 and 2021 where they match reported figures. This suggests significant liabilities were recognized during 2020, likely influenced by extraordinary events.

Stockholders’ Equity Dynamics

Stockholders’ equity exhibits a declining trajectory over the analyzed years. Reported equity decreased from around $13.9 billion in 2017 to approximately $3.9 billion in 2021. Adjusted equity follows the same downward trend but reveals more volatility, showing positive values between 2017 and 2019, a sharp negative figure in 2020, and a modest recovery in 2021. The negative equity in adjusted terms for 2020 points to significant financial stress or adjustments impacting shareholders' net worth during that year.

Net Income (Loss) Performance

Reported net income rose from about $3.6 billion in 2017 to $4.8 billion in 2019, then sharply declined to a loss of approximately $12.4 billion in 2020, before recovering slightly to a positive $280 million in 2021. Adjusted net income reflects a similar but more amplified pattern, peaking at $6.2 billion in 2019, dropping to a loss of roughly $15.5 billion in 2020, and returning to a modest profit in 2021. The significant losses in 2020 underscore severe adverse impacts on profitability, with adjustments further exacerbating the downturn.

Summary of Financial Health

The data reveal a robust growth in asset base over the five-year period, countered by a sharp increase in liabilities starting in 2020. Equity values and net income figures indicate a period of financial deterioration in 2020, likely related to extraordinary circumstances, with some recovery signs in 2021. Adjusted figures tend to reflect more pronounced negative impacts, suggesting that accounting adjustments related to income taxes and related provisions intensified the financial challenges during the critical periods.

Net Profit Margin

The reported net profit margin exhibited a generally positive trend from 2017 to 2019, increasing from 8.67% to 10.14%. However, a sharp decline occurred in 2020, with the margin plunging to -72.45%, followed by a modest recovery to 0.94% in 2021. The adjusted net profit margin followed a similar pattern, showing stability and moderate growth prior to 2020, peaking at 13.69% in 2017 and 13.27% in 2019, then experiencing an even more pronounced decline in 2020 to -90.64%, and a slight improvement to 1.32% in 2021.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios remained relatively stable from 2017 through 2019, averaging around 0.74 to 0.79. A significant drop occurred in 2020, decreasing sharply to approximately 0.24, indicating reduced efficiency in using assets to generate revenue during that year. In 2021, a partial recovery took place, with turnover values rising to roughly 0.41 to 0.42, yet remaining well below levels seen before 2020.

Financial Leverage

Reported financial leverage ratios increased steadily from 3.83 in 2017 to 4.4 in 2018, and slightly decreased to 4.2 in 2019. A striking surge was observed in 2020, when leverage escalated dramatically to 46.93, reflecting a significant rise in reliance on debt or liabilities. The value decreased in 2021 to 18.64 but remained considerably elevated compared to pre-2020 levels. Adjusted financial leverage mirrored the initial upward trend and sustained moderate levels through 2019, but data is missing for 2020. In 2021, leverage reached 27.44, suggesting ongoing increased leverage compared to earlier years.

Return on Equity (ROE)

Reported ROE showed consistent growth from 25.72% in 2017 to 31.04% in 2019. However, the figure plummeted sharply in 2020 to -807.37%, indicating severe losses relative to equity. By 2021, ROE partially rebounded to 7.2%, though still far below pre-2020 performance. Adjusted ROE data aligns with this pattern, demonstrating relatively high returns between 37.38% and 43.53% before 2020. No data is available for 2020, but the 2021 adjusted figure of 15.19% signifies partial recovery with improved profitability on equity.

Return on Assets (ROA)

Reported ROA remained stable at moderate levels around 6.5% to 7.4% from 2017 to 2019 before experiencing a sudden drop to -17.2% in 2020, reflecting negative returns on the asset base. The metric modestly recovered to 0.39% in 2021. Adjusted ROA followed a similar downward trend, starting at higher values from 8.83% to 10.79% in earlier years, dropping to -22.13% in 2020, then improving to 0.55% in 2021.

Overall, the data show consistent operational efficiency and profitability in the years leading up to 2020, followed by a significant deterioration across all metrics in 2020, likely attributable to an extraordinary external event impacting financial performance severely. The subsequent partial recovery observed in 2021 indicates some normalization, though several financial ratios remain significantly below their pre-2020 levels, with elevated financial leverage suggesting increased financial risk or debt burden has persisted.

The financial data under review reveals significant variations in both reported and adjusted income figures, alongside their corresponding profit margins, over the course of five consecutive years.

Net Income

Reported net income exhibited a generally upward trend from 2017 through 2019, increasing from 3577 million US dollars to a peak of 4767 million US dollars. However, there was a dramatic reversal in 2020, with the figure plunging to a substantial loss of 12385 million US dollars. In 2021, the reported net income partially recovered to 280 million US dollars, indicating improvement but still far below pre-2020 levels.

Adjusted net income similarly ascended from 5648 million US dollars in 2017 to a high of 6240 million US dollars in 2019. This measure also recorded a deep loss in 2020, even more pronounced than the reported figure, falling to negative 15495 million US dollars. By 2021, adjusted net income rebounded to a positive 394 million US dollars, reflecting a recovery trend comparable to that of the reported net income.

Net Profit Margins

The reported net profit margin mirrored the net income pattern, rising from 8.67% in 2017 to 10.14% in 2019, indicating improving profitability. However, in 2020 the margin suffered a severe decline to negative 72.45%, consistent with the significant net loss incurred that year. There was a modest rebound in 2021 to 0.94%, yet the margin remained drastically lower than the levels seen prior to 2020.

Adjusted net profit margin exhibited a comparable trajectory, increasing from 13.69% in 2017 to 13.27% in 2019, before plunging drastically to negative 90.64% in 2020. The margin recovered to 1.32% in 2021, still reflecting a much weakened financial position relative to earlier years.

Overall, the data indicates a period of financial strength and growth from 2017 to 2019, followed by a substantial and unprecedented adverse impact in 2020, likely attributable to extraordinary circumstances. The subsequent improvement in 2021 suggests initial recovery efforts had some effect, though profitability and income levels remained significantly below pre-2020 standards. Adjusted figures, accounting for income tax considerations, underscore a more pronounced volatility and loss during the downturn period.

The financial data reveals several important trends related to total assets and asset turnover over a five-year period.

Total Assets

Both the reported total assets and the adjusted total assets show a steady increase from 2017 through to 2021. Reported total assets rose from approximately 53,292 million US dollars in 2017 to 72,459 million by the end of 2021. Similarly, adjusted total assets increased from about 52,357 million US dollars in 2017 to 71,164 million in 2021. The growth in adjusted assets closely mirrors that of reported assets, indicating that deferred income tax adjustments have a consistent but relatively small impact on the total asset figures.

Total Asset Turnover

The reported total asset turnover ratio depicts a declining trend over the same period, starting at 0.77 in 2017 and decreasing gradually to 0.73 in 2019, before dropping steeply to 0.24 in 2020. It shows a partial recovery to 0.41 in 2021. The adjusted total asset turnover ratio follows a very similar pattern, with values ranging from 0.79 down to 0.42 by 2021. This sharp decline around 2020 aligns with the global economic disruptions experienced during that year, and the subsequent partial rebound in 2021 suggests some recovery in operational efficiency or asset utilization.

Comparative Insights

The adjusted asset measures and turnover ratios are slightly lower than the reported figures but track the same overall trends, confirming the consistency of deferred tax adjustments over time. The substantial dip in asset turnover in 2020 highlights a significant challenge in generating revenue from assets during that period, likely due to reduced operational activity. The subsequent improvement in 2021, although notable, does not fully restore turnover ratios to pre-2020 levels.

Total Assets

Reported total assets increased consistently from approximately $53.3 billion in 2017 to around $72.5 billion in 2021. The adjusted total assets exhibit a similar upward trajectory, starting at about $52.4 billion in 2017 and rising to approximately $71.2 billion by 2021. The steady growth in both reported and adjusted total assets over the five-year period indicates an expansion of the asset base.

Stockholders' Equity

Reported stockholders’ equity shows a rising trend from $13.9 billion in 2017, peaking at $15.4 billion in 2019, before sharply declining to $1.5 billion in 2020 and partially recovering to $3.9 billion in 2021. Adjusted stockholders' equity follows a similar pattern but shows a higher peak of $16.7 billion in 2019, turning negative to -$0.45 billion in 2020 and then improving to $2.6 billion in 2021. The marked decline during 2020 reflects a significant reduction in equity, likely attributable to extraordinary events impacting the financial position.

Financial Leverage

Reported financial leverage ratios ranged from 3.83 in 2017 to 4.4 in 2018, then slightly decreased to 4.2 in 2019. In 2020, there was a substantial spike to 46.93, followed by a decline to 18.64 in 2021. Adjusted financial leverage ratios show a similar initial pattern, increasing from 4.04 in 2017 to 4.41 in 2018, then decreasing to 3.86 in 2019. Data is unavailable for 2020, but leverage sharply increases to 27.44 in 2021. The extreme increases in financial leverage ratios in 2020 and 2021 highlight a considerable rise in debt relative to equity, corresponding with the observed equity declines.

Overall Insights

The data demonstrates continuous asset growth but reveals significant volatility in equity and financial leverage during 2020 and 2021. This suggests that while the company expanded its asset base steadily, its financial structure was heavily impacted, resulting in decreased equity and increased leverage, particularly in the pandemic-affected years. The partial recovery in equity and improvement in leverage ratios in 2021 may indicate initial stages of financial stabilization.

Net Income Trends

The reported net income experienced an upward trajectory from 2017 to 2019, rising from 3,577 million USD to 4,767 million USD. However, 2020 marked a significant downturn with a substantial loss of 12,385 million USD, before recovering somewhat in 2021 to a positive 280 million USD. The adjusted net income follows a similar pattern but presents consistently higher values compared to the reported figures, indicating that adjustments increased profitability figures. The adjusted net income peaked at 6,240 million USD in 2019, then declined sharply to a loss of 15,495 million USD in 2020, with a partial recovery to 394 million USD in 2021.

Stockholders’ Equity Patterns

Reported stockholders’ equity remained relatively stable and even increased from 13,910 million USD in 2017 to 15,358 million USD in 2019, before dropping drastically to 1,534 million USD in 2020 and recovering moderately to 3,887 million USD in 2021. Adjusted stockholders’ equity shows a somewhat different pattern; it increased to 16,694 million USD by 2019 but then fell sharply to negative 454 million USD in 2020, reflecting a more severe impact when adjustments are considered, with some improvement to 2,593 million USD in 2021.

Return on Equity (ROE) Insights

Reported ROE values indicated strong profitability from 2017 through 2019, increasing from 25.72% to 31.04%. A profound negative return of -807.37% occurred in 2020, aligning with the large net loss and reduction in equity, followed by a recovery to 7.2% in 2021. Adjusted ROE also shows high profitability in 2017 and 2018 (43.53% and 38.94%), with a slight decline to 37.38% in 2019. The data for 2020 is missing, but the adjusted ROE bounced back to 15.19% in 2021, suggesting a better relative return compared to the reported figure after adjustments.

Overall Financial Performance

The financial data reflects a stable and profitable period from 2017 to 2019, followed by a severe downturn in 2020, likely due to extraordinary circumstances affecting income and equity negatively. Both reported and adjusted figures exhibit a significant drop in 2020, with adjusted metrics showing more pronounced declines, especially in equity. The partial recovery in 2021 across net income, equity, and ROE indicates improvement but not a return to pre-2020 levels. Adjusted data consistently show higher net incomes and ROE before 2020 and deeper losses and equity reductions during 2020, highlighting the impact of adjustments on financial performance assessment.

The financial data exhibits notable fluctuations over the analyzed periods. Key profitability indicators, including net income and return on assets (ROA), reveal significant volatility, particularly during the year ending in December 2020.

Net Income Trends

Reported net income demonstrated an upward trajectory from 2017 through 2019, increasing from 3,577 million US dollars to 4,767 million US dollars. However, there was a pronounced reversal in 2020, with a substantial loss of -12,385 million US dollars, followed by recovery to a modest positive income of 280 million US dollars in 2021.

Adjusted net income followed a similar pattern but consistently reflected higher values compared to reported figures. It grew from 5,648 million US dollars in 2017 to 6,240 million US dollars in 2019, then experienced a dramatic decline to a loss of -15,495 million US dollars in 2020, before recovering slightly to 394 million US dollars in 2021.

Total Assets Analysis

Total assets, both reported and adjusted, displayed consistent growth throughout the period. Reported total assets rose from 53,292 million US dollars in 2017 to 72,459 million US dollars in 2021. Adjusted total assets showed a parallel increase, expanding from 52,357 million US dollars to 71,164 million US dollars over the same timeframe.

Return on Assets (ROA) Patterns

Reported ROA initially declined slightly from 6.71% in 2017 to 6.53% in 2018 before improving to 7.39% in 2019. However, it turned significantly negative at -17.2% in 2020, indicating a period of substantial operational losses, and partially recovered to a low positive figure of 0.39% in 2021.

Adjusted ROA values mirrored this trend, though they were consistently higher than reported ROA. Adjusted ROA decreased from 10.79% in 2017 to 8.83% in 2018, then slightly improved to 9.69% in 2019. In 2020, adjusted ROA sharply fell to -22.13%, followed by a mild recovery to 0.55% in 2021.

Overall, the company exhibited strong growth and profitability through 2019, followed by a severe downturn in 2020 likely due to extraordinary negative factors. Despite recovery signs in 2021, profitability remained subdued compared to pre-2020 levels. The growth in total assets suggests ongoing investment or asset accumulation during this period, although such growth did not translate into profitability during the crisis year. The consistent difference between reported and adjusted figures implies the impact of adjustments, possibly related to tax treatments or other accounting considerations, affecting the company's financial outcomes.