Market Value Added (MVA)
Market value added (MVA) is the difference between a firm fair value and its invested capital. MVA is a measure of the value a company has created in excess of the resources already committed to the enterprise.
MVA
Delta Air Lines Inc., MVA calculation
US$ in millions
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 Fair value of debt. See details »
2 Invested capital. See details »
The Market Value Added (MVA) for Delta Air Lines exhibited significant volatility between 2017 and 2021, characterized by a sharp contraction in the early period followed by a strong recovery and subsequent moderation.
- Market Value Trends
- The market value experienced a notable decrease in 2018, falling to $49,953 million from $57,734 million in 2017. Following this decline, a consistent recovery trend was observed from 2019 through 2021, with the valuation reaching a period high of $58,738 million by December 31, 2021.
- Invested Capital Fluctuations
- Invested capital demonstrated lower volatility than market value, fluctuating between a low of $43,326 million in 2018 and a peak of $47,580 million in 2019. A reduction in invested capital occurred in 2020, followed by an increase to $47,166 million in 2021.
- MVA Performance and Dynamics
- A substantial decline in MVA is observed between 2017 and 2018, where the value dropped from $13,326 million to $6,627 million, reflecting a decrease in the premium the market assigned over the invested capital. This value remained nearly flat through 2019. A significant recovery occurred in 2020, with MVA peaking at $13,596 million, a result of rising market value coinciding with a reduction in invested capital. In 2021, MVA decreased to $11,572 million as the growth in invested capital began to offset the gains in market valuation.
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MVA Spread Ratio
Delta Air Lines Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 11,572) | 13,596) | 6,719) | 6,627) | 13,326) | |
| Invested capital2 | 47,166) | 44,197) | 47,580) | 43,326) | 44,409) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 24.54% | 30.76% | 14.12% | 15.30% | 30.01% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| FedEx Corp. | 83.76% | — | — | — | — | |
| Uber Technologies Inc. | 331.50% | — | — | — | — | |
| Union Pacific Corp. | 224.50% | — | — | — | — | |
| United Airlines Holdings Inc. | 9.50% | — | — | — | — | |
| United Parcel Service Inc. | 373.66% | — | — | — | — | |
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 MVA. See details »
2 Invested capital. See details »
3 2021 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 11,572 ÷ 47,166 = 24.54%
4 Click competitor name to see calculations.
The financial performance metrics from 2017 to 2021 demonstrate significant volatility in market-based value creation relative to the capital invested in the organization.
- Market Value Added (MVA)
- A sharp contraction in MVA is observed between 2017 and 2018, where the value decreased from 13,326 million US$ to 6,627 million US$. This figure remained relatively stagnant through 2019 before experiencing a substantial recovery to a five-year peak of 13,596 million US$ in 2020. A subsequent moderate decline occurred by the end of 2021, with the value settling at 11,572 million US$.
- Invested Capital
- The capital base remained comparatively stable over the analyzed period, fluctuating within a range of 43,326 million US$ to 47,580 million US$. Slight increases were noted in 2019 and 2021, indicating that the scale of investment remained consistent despite the fluctuations in market valuation.
- MVA Spread Ratio
- The MVA spread ratio closely mirrored the trajectory of the MVA. A significant downward trend is evident from 2017 to 2019, with the ratio falling from 30.01% to 14.12%. This suggests a period of diminished market value creation relative to the capital employed. A sharp reversal occurred in 2020, with the ratio reaching its maximum of 30.76%, before moderating to 24.54% in 2021.
The strong correlation between the MVA and the MVA spread ratio indicates that fluctuations in market valuation, rather than changes in the invested capital base, were the primary drivers of the ratio's volatility. The peak observed in 2020 reflects a significant expansion in the market's perception of value added above the invested capital, which subsequently normalized in 2021.
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MVA Margin
Delta Air Lines Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 11,572) | 13,596) | 6,719) | 6,627) | 13,326) | |
| 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 | ||||||
| MVA margin2 | 38.22% | 77.48% | 14.27% | 14.81% | 32.16% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| FedEx Corp. | 64.08% | — | — | — | — | |
| Uber Technologies Inc. | 305.35% | — | — | — | — | |
| Union Pacific Corp. | 599.66% | — | — | — | — | |
| United Airlines Holdings Inc. | 20.01% | — | — | — | — | |
| United Parcel Service Inc. | 170.51% | — | — | — | — | |
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 MVA. See details »
2 2021 Calculation
MVA margin = 100 × MVA ÷ Adjusted operating revenue
= 100 × 11,572 ÷ 30,276 = 38.22%
3 Click competitor name to see calculations.
Between 2017 and 2021, the financial metrics regarding market value added and operating revenue exhibited significant volatility, characterized by a severe operational contraction in 2020 and a subsequent recovery phase in 2021.
- Market Value Added (MVA) Trends
- A substantial decrease in MVA was observed between 2017 and 2018, falling from 13,326 million USD to 6,627 million USD. This value remained relatively stable through 2019 at 6,719 million USD before experiencing a sharp increase in 2020 to 13,596 million USD. A slight correction followed in 2021, with MVA settling at 11,572 million USD.
- Adjusted Operating Revenue Performance
- Operating revenues showed consistent growth from 2017 to 2019, rising from 41,436 million USD to a peak of 47,094 million USD. A drastic decline occurred in 2020, with revenues plummeting to 17,549 million USD, representing a significant operational disruption. A partial recovery was noted in 2021, as revenues increased to 30,276 million USD.
- MVA Margin Analysis
- The MVA margin followed a downward trend in the initial period, declining from 32.16% in 2017 to 14.27% in 2019. An atypical spike occurred in 2020, where the margin reached 77.48%. This increase was driven by the collapse of adjusted operating revenue while the MVA concurrently increased, creating a disproportionate ratio. By 2021, the margin normalized to 38.22% as operating revenues began to recover.
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