Stock Analysis on Net

Delta Air Lines Inc. (NYSE:DAL)

This company has been moved to the archive! The financial data has not been updated since July 13, 2022.

Economic Value Added (EVA)

Microsoft Excel

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

Delta Air Lines Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Net operating profit after taxes (NOPAT)1 1,932  (13,902) 6,651  6,032  6,446 
Cost of capital2 8.71% 9.03% 11.62% 11.57% 10.96%
Invested capital3 47,166  44,197  47,580  43,326  44,409 
 
Economic profit4 (2,176) (17,892) 1,124  1,021  1,580 

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,9328.71% × 47,166 = -2,176

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Delta Air Lines Inc. economic profit decreased from 2019 to 2020 but then increased from 2020 to 2021 not reaching 2019 level.

Net Operating Profit after Taxes (NOPAT)

Delta Air Lines Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Net income (loss) 280  (12,385) 4,767  3,935  3,577 
Deferred income tax expense (benefit)1 114  (3,110) 1,473  1,364  2,071 
Increase (decrease) in allowance for uncollectible accounts2 (39) 76  —  (3)
Increase (decrease) in loyalty program deferred revenue3 377  454  87  320  192 
Increase (decrease) in equity equivalents4 452  (2,580) 1,561  1,684  2,260 
Interest expense, net 1,279  929  301  311  396 
Interest expense, operating lease liability5 296  312  227  249  550 
Adjusted interest expense, net 1,575  1,241  528  560  946 
Tax benefit of interest expense, net6 (331) (261) (111) (118) (331)
Adjusted interest expense, net, after taxes7 1,244  980  417  443  615 
(Gain) loss on marketable securities (56) 105  (119) (38) (8)
Investment income, before taxes (56) 105  (119) (38) (8)
Tax expense (benefit) of investment income8 12  (22) 25 
Investment income, after taxes9 (44) 83  (94) (30) (5)
Net operating profit after taxes (NOPAT) 1,932  (13,902) 6,651  6,032  6,446 

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for uncollectible accounts.

3 Addition of increase (decrease) in loyalty program deferred revenue.

4 Addition of increase (decrease) in equity equivalents to net income (loss).

5 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 7,759 × 3.81% = 296

6 2021 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 1,575 × 21.00% = 331

7 Addition of after taxes interest expense to net income (loss).

8 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 56 × 21.00% = 12

9 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Delta Air Lines Inc. NOPAT decreased from 2019 to 2020 but then increased from 2020 to 2021 not reaching 2019 level.

Cash Operating Taxes

Delta Air Lines Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Income tax provision (benefit) 118  (3,202) 1,431  1,216  2,124 
Less: Deferred income tax expense (benefit) 114  (3,110) 1,473  1,364  2,071 
Add: Tax savings from interest expense, net 331  261  111  118  331 
Less: Tax imposed on investment income 12  (22) 25 
Cash operating taxes 323  191  44  (38) 381 

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Delta Air Lines Inc. cash operating taxes increased from 2019 to 2020 and from 2020 to 2021.

Invested Capital

Delta Air Lines Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Current maturities of debt and finance leases 1,782  1,732  2,287  1,518  2,242 
Debt and finance leases, excluding current maturities 25,138  27,425  8,873  8,253  6,592 
Operating lease liability1 7,759  6,391  6,095  6,756  12,187 
Total reported debt & leases 34,679  35,548  17,255  16,527  21,021 
Stockholders’ equity 3,887  1,534  15,358  13,687  13,910 
Net deferred tax (assets) liabilities2 (1,294) (1,988) 1,336  (79) (935)
Allowance for uncollectible accounts3 50  89  13  12  12 
Loyalty program deferred revenue4 7,559  7,182  6,728  6,641  4,118 
Equity equivalents5 6,315  5,283  8,077  6,574  3,195 
Accumulated other comprehensive (income) loss, net of tax6 7,130  9,038  7,989  7,825  7,621 
Adjusted stockholders’ equity 17,332  15,855  31,424  28,086  24,726 
Investments7 (4,845) (7,206) (1,099) (1,287) (1,338)
Invested capital 47,166  44,197  47,580  43,326  44,409 

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of loyalty program deferred revenue.

5 Addition of equity equivalents to stockholders’ equity.

6 Removal of accumulated other comprehensive income.

7 Subtraction of investments.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Delta Air Lines Inc. invested capital decreased from 2019 to 2020 but then increased from 2020 to 2021 not reaching 2019 level.

Cost of Capital

Delta Air Lines Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 27,088  27,088  ÷ 63,583  = 0.43 0.43 × 15.29% = 6.51%
Debt and finance leases3 28,736  28,736  ÷ 63,583  = 0.45 0.45 × 5.12% × (1 – 21.00%) = 1.83%
Operating lease liability4 7,759  7,759  ÷ 63,583  = 0.12 0.12 × 3.81% × (1 – 21.00%) = 0.37%
Total: 63,583  1.00 8.71%

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance leases. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 27,625  27,625  ÷ 64,999  = 0.43 0.43 × 15.29% = 6.50%
Debt and finance leases3 30,983  30,983  ÷ 64,999  = 0.48 0.48 × 5.71% × (1 – 21.00%) = 2.15%
Operating lease liability4 6,391  6,391  ÷ 64,999  = 0.10 0.10 × 4.88% × (1 – 21.00%) = 0.38%
Total: 64,999  1.00 9.03%

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance leases. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 37,849  37,849  ÷ 55,398  = 0.68 0.68 × 15.29% = 10.45%
Debt and finance leases3 11,454  11,454  ÷ 55,398  = 0.21 0.21 × 5.18% × (1 – 21.00%) = 0.85%
Operating lease liability4 6,095  6,095  ÷ 55,398  = 0.11 0.11 × 3.73% × (1 – 21.00%) = 0.32%
Total: 55,398  1.00 11.62%

Based on: 10-K (reporting date: 2019-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance leases. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 34,681  34,681  ÷ 51,240  = 0.68 0.68 × 15.29% = 10.35%
Debt and finance leases3 9,803  9,803  ÷ 51,240  = 0.19 0.19 × 5.51% × (1 – 21.00%) = 0.83%
Operating lease liability4 6,756  6,756  ÷ 51,240  = 0.13 0.13 × 3.69% × (1 – 21.00%) = 0.38%
Total: 51,240  1.00 11.57%

Based on: 10-K (reporting date: 2018-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance leases. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 37,792  37,792  ÷ 59,072  = 0.64 0.64 × 15.29% = 9.78%
Debt and finance leases3 9,094  9,094  ÷ 59,072  = 0.15 0.15 × 5.71% × (1 – 35.00%) = 0.57%
Operating lease liability4 12,187  12,187  ÷ 59,072  = 0.21 0.21 × 4.51% × (1 – 35.00%) = 0.60%
Total: 59,072  1.00 10.96%

Based on: 10-K (reporting date: 2017-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance leases. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Delta Air Lines Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Selected Financial Data (US$ in millions)
Economic profit1 (2,176) (17,892) 1,124  1,021  1,580 
Invested capital2 47,166  44,197  47,580  43,326  44,409 
Performance Ratio
Economic spread ratio3 -4.61% -40.48% 2.36% 2.36% 3.56%
Benchmarks
Economic Spread Ratio, Competitors4
American Airlines Group Inc. -9.39% -39.45% 2.14% 0.41% 0.87%
CSX Corp. -0.28% -2.45% -0.02% -0.31% -4.12%
FedEx Corp. 0.00% -5.12% -7.72% -1.28% -1.31%
Union Pacific Corp. 0.31% -1.29% 0.09% -0.53% -1.64%
United Parcel Service Inc. 21.73% -8.39% 3.03% 7.64% 11.12%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -2,176 ÷ 47,166 = -4.61%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Delta Air Lines Inc. economic spread ratio deteriorated from 2019 to 2020 but then improved from 2020 to 2021 not reaching 2019 level.

Economic Profit Margin

Delta Air Lines Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Selected Financial Data (US$ in millions)
Economic profit1 (2,176) (17,892) 1,124  1,021  1,580 
 
Operating revenue 29,899  17,095  47,007  44,438  41,244 
Add: Increase (decrease) in loyalty program deferred revenue 377  454  87  320  192 
Adjusted operating revenue 30,276  17,549  47,094  44,758  41,436 
Performance Ratio
Economic profit margin2 -7.19% -101.95% 2.39% 2.28% 3.81%
Benchmarks
Economic Profit Margin, Competitors3
American Airlines Group Inc. -9.15% -71.54% 1.66% 0.31% 0.80%
CSX Corp. -0.85% -8.72% -0.07% -0.87% -11.86%
FedEx Corp. 0.00% -4.26% -5.88% -1.04% -1.05%
Union Pacific Corp. 0.84% -3.84% 0.22% -1.32% -4.25%
United Parcel Service Inc. 9.92% -3.29% 1.49% 3.39% 4.91%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 Economic profit. See details »

2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted operating revenue
= 100 × -2,176 ÷ 30,276 = -7.19%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Delta Air Lines Inc. economic profit margin deteriorated from 2019 to 2020 but then improved from 2020 to 2021 not reaching 2019 level.