Delta Air Lines Inc. (NYSE:DAL)

Current Ratio

The current ratio remained relatively low and stable from early 2018 through 2019, fluctuating around 0.34 to 0.41. Starting in the first quarter of 2020, it increased markedly, reaching a peak of 1.27 in the third quarter of 2020, before declining gradually through 2021 and 2022. By mid-2022, the ratio settled around 0.65 to 0.66, indicating a decrease in short-term liquidity following the temporary rise.

Quick Ratio

The quick ratio exhibited a pattern similar to the current ratio, maintaining values around 0.20 to 0.28 throughout 2018 and 2019. There was a significant improvement beginning in the first quarter of 2020, peaking at 1.17 in the third quarter of 2020. Following this peak, the quick ratio declined steadily, reaching approximately 0.53 by mid-2022. This trend suggests a noteworthy but temporary enhancement in liquid asset coverage of current liabilities during 2020.

Cash Ratio

The cash ratio consistently showed the lowest values among the liquidity ratios in the 2018–2019 period, ranging from 0.07 to 0.14. From the first quarter of 2020, the ratio nearly quadrupled, reaching its highest point at 1.09 in the third quarter of 2020. After this peak, there was a marked decrease through subsequent quarters, with the ratio stabilizing around 0.41 by mid-2022. This pattern indicates a significant temporary accumulation of cash or cash equivalents in early to mid-2020, followed by a reduction.

Overall Liquidity Trends

All three liquidity ratios display a notable increase in early 2020, peaking around the third quarter of that year. This is followed by a steady decline through late 2021 and mid-2022, though the levels do not return to pre-2020 values fully. The pronounced increase in liquidity ratios in 2020 suggests a strategic accumulation of current and liquid assets, likely in response to external factors affecting the business environment. The subsequent decline reflects a reversion towards more normalized liquidity levels, albeit at somewhat improved levels compared to the pre-2020 period.

Current Assets

Current assets show a generally increasing trend from early 2018 through mid-2022, with some variability. Starting at approximately 7,724 million USD at the end of Q1 2018, the figure decreased slightly during 2018 but then increased significantly beginning in Q1 2020. The peak is observed in Q3 2020 at around 25,030 million USD, after which a decline occurred towards the end of 2020. In 2021 and into mid-2022, current assets stabilized in the range of approximately 15,700 to 19,700 million USD.

Current Liabilities

Current liabilities remained consistently high throughout the period, exceeding current assets at all times. The values fluctuated moderately, beginning at about 20,012 million USD in Q1 2018 with slight decreases toward Q3 2018, then increasing again to peak above 24,000 million USD in mid-2022. Notably, there was a decline in liabilities in Q4 2020 reaching approximately 15,927 million USD before rising again in subsequent quarters.

Current Ratio

The current ratio, representing liquidity position, was consistently below 1.0 from 2018 through early 2020, indicating current liabilities exceeded current assets. The ratio ranged roughly between 0.34 and 0.41 during this initial period. Beginning in Q1 2020, the current ratio improved sharply, rising to 1.27 by Q3 2020, the highest value recorded, reflecting an increase in liquidity likely due to the surge in current assets and reduction in liabilities. Following this peak, the ratio declined steadily throughout 2021 and into 2022, falling back below 1.0, to approximately 0.65 by mid-2022. This reversal suggests a decrease in short-term financial strength compared to the prior period.

Overall Observations

The data suggests a period of strengthened liquidity during 2020, potentially in response to external challenges, as indicated by the substantial increase in current assets and improvement in the current ratio above the critical threshold of 1.0. The subsequent decline in the current ratio in 2021 and 2022 implies a reduction in liquidity, despite current assets remaining significantly higher than pre-2020 levels. Throughout the entire period, liabilities remained consistently high, often surpassing assets except during the temporary liquidity enhancement in 2020. Monitoring these trends is essential for understanding the company’s ability to meet short-term obligations under varying economic conditions.

The financial analysis over the examined periods reveals notable trends in liquidity and short-term financial health. The total quick assets exhibited variability, with a general increase from early 2018 through mid-2020, peaking around June and September 2020. This surge suggests a significant accumulation of liquid resources during that timeframe. However, from late 2020 onward, quick assets showed a declining trajectory, indicating a reduction in readily available liquid assets towards mid-2022.

In contrast, current liabilities remained relatively high throughout the periods, fluctuating but generally showing an increasing trend from early 2018 to mid-2022. The liabilities peaked notably towards the second quarter of 2022, reflecting rising short-term obligations.

The quick ratio, which measures the ability to cover current liabilities with quick assets, mirrored these trends closely. Initially, the ratio was low, below 0.3, indicating limited liquidity relative to current liabilities. It improved markedly during 2020, reaching a peak above 1.0, corresponding to the significant increase in quick assets during that year. This suggested an enhanced ability to meet short-term obligations without relying on inventory sales.

Subsequently, the quick ratio declined from the peak in 2020 down to approximately 0.5 by mid-2022. This reduction points to a diminished liquidity buffer relative to liabilities. The combination of decreasing quick assets and rising current liabilities contributed to this downward trend in financial safety.

Overall, the data indicates a period of liquidity strengthening around the mid-2020 mark, potentially as a strategic response to external conditions, followed by a gradual erosion of that liquidity position through 2021 and into 2022. The company appears to face increasing short-term liabilities concurrently with diminishing quick assets, which warrants monitoring to ensure adequate liquidity management going forward.

The financial data reveals significant fluctuations in key liquidity metrics over the observed periods, indicating evolving financial conditions.

Total cash assets

Total cash assets experienced a general upward trajectory from March 2018 through June 2020, rising sharply from $1,447 million to a peak of $21,525 million. This sharp increase in 2020 corresponds with the early period of the global economic disruption, suggesting strategic cash accumulation. However, following this peak, cash assets showed a consistent decline, dropping to $9,955 million by March 2022, before a slight increase to $10,770 million in June 2022. This trend suggests a utilization of cash reserves after the period of accumulation.

Current liabilities

Current liabilities fluctuated but generally hovered within a broad range around $19 billion to $26 billion. Notably, liabilities decreased from the peak in March 2019 of approximately $21,323 million to a lower point near $15,927 million at the end of 2020. Subsequently, liabilities rose again, reaching a high of $26,324 million by June 2022. This pattern indicates variability in short-term obligations, with a significant increase in recent periods signaling potentially higher operational or financial demands.

Cash ratio

The cash ratio, an indicator of liquidity by comparing cash assets to current liabilities, showed a marked improvement during 2020. It increased steeply from 0.14 in December 2019 to a peak of 1.09 in September 2020, reflecting the extraordinary build-up of cash relative to short-term liabilities. Following this peak, the ratio declined steadily to 0.41 by mid-2022, which, while lower, remains higher than the pre-2020 levels generally below 0.15. This suggests that although liquidity pressures eased after initial accumulation, the company sustains a relatively stronger liquidity position than before 2020.

Overall, the data indicates a strategic accumulation of cash assets starting in early 2020 to address unprecedented economic challenges. Despite a subsequent drawdown of cash and increasing current liabilities, the liquidity position remains stronger than in earlier years, reflecting adaptive financial management in response to changing market conditions.