Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Delta Air Lines Inc., solvency ratios
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).
The solvency profile between 2017 and 2021 exhibits a period of stability followed by a severe deterioration in 2020 and a partial recovery in 2021. The most significant fluctuations are observed in leverage and coverage metrics, reflecting a substantial increase in debt obligations and a temporary collapse in the ability to service those obligations during the 2020 fiscal year.
- Leverage and Equity Ratios
- Debt to equity ratios remained relatively stable from 2017 to 2019, ranging between 0.64 and 0.73. However, a massive spike occurred in 2020, with the ratio reaching 19.01, before moderating to 6.93 in 2021. When operating lease liabilities are included, the 2020 peak increases to 23.17. Financial leverage followed an identical trajectory, rising from a range of 3.83 to 4.40 in the early period to a peak of 46.93 in 2020, subsequently descending to 18.64 in 2021.
- Capital and Asset Composition
- Debt to capital ratios showed a gradual increase from 0.39 in 2017 to 0.42 in 2019, before jumping to 0.95 in 2020 and settling at 0.87 in 2021. Debt to assets ratios remained consistent around 0.17 until 2020, where they climbed to 0.40. The inclusion of operating lease liabilities significantly elevated these figures, with the debt to assets ratio peaking at 0.49 in 2020, indicating a heightened reliance on borrowed funds to support the asset base.
- Debt Service Coverage
- Interest coverage and fixed charge coverage ratios displayed strong upward trends from 2017 through 2019, with interest coverage peaking at 21.59. This trend reversed sharply in 2020, with interest coverage falling to -15.78 and fixed charge coverage to -7.00, signaling that operating earnings were insufficient to cover interest and fixed obligations. By 2021, both ratios returned to positive territory, with interest coverage at 1.31 and fixed charge coverage at 1.19, though these levels remain substantially lower than the pre-2020 baseline.
AI Ask an analyst for more
Debt Ratios
Coverage Ratios
Debt to Equity
Delta Air Lines Inc., debt to equity 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) | ||||||
| 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) | |
| Total debt | 26,920) | 29,157) | 11,160) | 9,771) | 8,834) | |
| Stockholders’ equity | 3,887) | 1,534) | 15,358) | 13,687) | 13,910) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 6.93 | 19.01 | 0.73 | 0.71 | 0.64 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| FedEx Corp. | 0.86 | — | — | — | — | |
| Uber Technologies Inc. | 0.66 | — | — | — | — | |
| Union Pacific Corp. | 2.10 | — | — | — | — | |
| United Airlines Holdings Inc. | 7.03 | — | — | — | — | |
| United Parcel Service Inc. | 1.54 | — | — | — | — | |
| Debt to Equity, Sector | ||||||
| Transportation | 1.63 | — | — | — | — | |
| Debt to Equity, Industry | ||||||
| Industrials | 1.37 | — | — | — | — | |
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 2021 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= 26,920 ÷ 3,887 = 6.93
2 Click competitor name to see calculations.
Between 2017 and 2021, a significant shift in the solvency profile is observed, transitioning from a stable, equity-heavy capital structure to one characterized by substantial leverage and diminished equity.
- Total Debt Trends
- Total debt exhibited moderate growth from 2017 to 2019, increasing from 8,834 million to 11,160 million. A sharp escalation occurred in 2020, where debt surged to 29,157 million, representing a nearly threefold increase. A slight reduction to 26,920 million was recorded by the end of 2021.
- Stockholders' Equity Trends
- Equity remained relatively consistent between 2017 and 2019, moving from 13,910 million to 15,358 million. A severe contraction occurred in 2020, with equity plummeting to 1,534 million. A partial recovery was observed in 2021, as equity increased to 3,887 million.
- Debt to Equity Ratio Analysis
- The debt to equity ratio remained conservative and stable from 2017 to 2019, ranging between 0.64 and 0.73. This stability was interrupted in 2020 when the ratio spiked to 19.01, indicating an extreme reliance on debt relative to equity. By 2021, the ratio decreased significantly to 6.93, though this figure remains substantially higher than the pre-2020 baseline, reflecting a continued high-leverage position.
AI Ask an analyst for more
Debt to Equity (including Operating Lease Liability)
Delta Air Lines Inc., debt to equity (including operating lease liability) 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) | ||||||
| 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) | |
| Total debt | 26,920) | 29,157) | 11,160) | 9,771) | 8,834) | |
| Current maturities of operating leases | 703) | 678) | 801) | 955) | —) | |
| Noncurrent operating leases | 7,056) | 5,713) | 5,294) | 5,801) | —) | |
| Total debt (including operating lease liability) | 34,679) | 35,548) | 17,255) | 16,527) | 8,834) | |
| Stockholders’ equity | 3,887) | 1,534) | 15,358) | 13,687) | 13,910) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 8.92 | 23.17 | 1.12 | 1.21 | 0.64 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| FedEx Corp. | 1.51 | — | — | — | — | |
| Uber Technologies Inc. | 0.79 | — | — | — | — | |
| Union Pacific Corp. | 2.22 | — | — | — | — | |
| United Airlines Holdings Inc. | 8.17 | — | — | — | — | |
| United Parcel Service Inc. | 1.79 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Transportation | 2.02 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Industrials | 1.54 | — | — | — | — | |
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 2021 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity
= 34,679 ÷ 3,887 = 8.92
2 Click competitor name to see calculations.
The financial position reflects a period of significant leverage expansion and extreme volatility in solvency metrics between 2017 and 2021. The trajectory is characterized by a stable baseline through 2019, followed by a severe deterioration of equity and a surge in debt obligations in 2020, with a partial recovery observed in 2021.
- Total Debt Trends
- Total debt, inclusive of operating lease liabilities, exhibited a steady upward trajectory, increasing from 8,834 million USD in 2017 to 17,255 million USD by 2019. A substantial spike occurred in 2020, where liabilities peaked at 35,548 million USD, representing more than a 100% increase within a single fiscal year. A marginal reduction was noted in 2021, with debt settling at 34,679 million USD.
- Stockholders' Equity Volatility
- Equity remained relatively consistent between 2017 and 2019, fluctuating within the 13,687 to 15,358 million USD range. However, a precipitous decline occurred in 2020, with equity falling to 1,534 million USD. By the end of 2021, a recovery was initiated, with equity increasing to 3,887 million USD, although this remains significantly below the levels maintained prior to 2020.
- Debt to Equity Ratio Analysis
- The solvency ratio demonstrates a critical shift in the capital structure. The ratio rose from 0.64 in 2017 to 1.12 in 2019, indicating a moderate increase in financial leverage. This trend escalated to an extreme peak of 23.17 in 2020, driven by the simultaneous surge in debt and the collapse of equity. While the ratio improved to 8.92 in 2021, the leverage remains substantially higher than historical norms, indicating a continued reliance on debt financing.
AI Ask an analyst for more
Debt to Capital
Delta Air Lines Inc., debt to capital 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) | ||||||
| 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) | |
| Total debt | 26,920) | 29,157) | 11,160) | 9,771) | 8,834) | |
| Stockholders’ equity | 3,887) | 1,534) | 15,358) | 13,687) | 13,910) | |
| Total capital | 30,807) | 30,691) | 26,518) | 23,458) | 22,744) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.87 | 0.95 | 0.42 | 0.42 | 0.39 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| FedEx Corp. | 0.46 | — | — | — | — | |
| Uber Technologies Inc. | 0.40 | — | — | — | — | |
| Union Pacific Corp. | 0.68 | — | — | — | — | |
| United Airlines Holdings Inc. | 0.88 | — | — | — | — | |
| United Parcel Service Inc. | 0.61 | — | — | — | — | |
| Debt to Capital, Sector | ||||||
| Transportation | 0.62 | — | — | — | — | |
| Debt to Capital, Industry | ||||||
| Industrials | 0.58 | — | — | — | — | |
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 2021 Calculation
Debt to capital = Total debt ÷ Total capital
= 26,920 ÷ 30,807 = 0.87
2 Click competitor name to see calculations.
The solvency profile from 2017 to 2021 is characterized by a period of relative stability followed by a significant increase in financial leverage starting in 2020. The shift indicates a fundamental change in the capital structure, moving from a balanced approach to one heavily reliant on debt financing.
- Total Debt Trajectory
- Total debt exhibited a gradual upward trend between 2017 and 2019, rising from 8,834 million US$ to 11,160 million US$. A substantial escalation occurred in 2020, where debt surged to 29,157 million US$, representing an increase of approximately 161% in a single year. By December 31, 2021, a slight reduction was observed, with total debt decreasing to 26,920 million US$.
- Capital Base Expansion
- Total capital grew steadily from 22,744 million US$ in 2017 to 30,807 million US$ in 2021. While the capital base expanded, the growth rate was far more moderate than the increase in debt, particularly during the 2020 fiscal year. This disparity suggests that the increase in total capital was primarily driven by the acquisition of new debt rather than equity contributions.
- Debt to Capital Ratio Analysis
- The debt to capital ratio remained stable and conservative between 2017 and 2019, fluctuating slightly between 0.39 and 0.42. This indicates that debt comprised roughly 40% of the total capital structure during this period. In 2020, the ratio experienced a sharp spike to 0.95, signaling that debt accounted for 95% of total capital. Although the ratio improved to 0.87 by the end of 2021, the level of leverage remains significantly elevated compared to the baseline established prior to 2020.
In summary, the analysis reveals a transition from a low-leverage position to a high-leverage position. The dramatic increase in the debt to capital ratio in 2020 suggests a period of intense borrowing, and while a marginal deleveraging trend began in 2021, the overall solvency risk remains higher than in previous years.
AI Ask an analyst for more
Debt to Capital (including Operating Lease Liability)
Delta Air Lines Inc., debt to capital (including operating lease liability) 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) | ||||||
| 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) | |
| Total debt | 26,920) | 29,157) | 11,160) | 9,771) | 8,834) | |
| Current maturities of operating leases | 703) | 678) | 801) | 955) | —) | |
| Noncurrent operating leases | 7,056) | 5,713) | 5,294) | 5,801) | —) | |
| Total debt (including operating lease liability) | 34,679) | 35,548) | 17,255) | 16,527) | 8,834) | |
| Stockholders’ equity | 3,887) | 1,534) | 15,358) | 13,687) | 13,910) | |
| Total capital (including operating lease liability) | 38,566) | 37,082) | 32,613) | 30,214) | 22,744) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.90 | 0.96 | 0.53 | 0.55 | 0.39 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| FedEx Corp. | 0.60 | — | — | — | — | |
| Uber Technologies Inc. | 0.44 | — | — | — | — | |
| Union Pacific Corp. | 0.69 | — | — | — | — | |
| United Airlines Holdings Inc. | 0.89 | — | — | — | — | |
| United Parcel Service Inc. | 0.64 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Transportation | 0.67 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Industrials | 0.61 | — | — | — | — | |
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 2021 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 34,679 ÷ 38,566 = 0.90
2 Click competitor name to see calculations.
A significant expansion in the leverage profile is observed between 2017 and 2021. Total debt, inclusive of operating lease liabilities, increased from US$ 8,834 million in 2017 to US$ 34,679 million in 2021. This substantial growth in liabilities outpaced the increase in total capital, which rose from US$ 22,744 million to US$ 38,566 million over the same period, leading to a marked shift in the organization's solvency position.
- Debt to Capital Ratio Progression
- The debt to capital ratio demonstrates a sharp upward trend, ascending from 0.39 in 2017 to a peak of 0.96 in 2020. Between 2017 and 2019, the ratio rose moderately from 0.39 to 0.53. A critical acceleration occurred in 2020, where the ratio reached 0.96, indicating that debt comprised nearly the entirety of the total capital structure.
- Analysis of Debt Accumulation
- Total debt grew by approximately 93% between 2017 and 2019, reaching US$ 17,255 million. A second, more aggressive phase of borrowing is evident between 2019 and 2020, during which debt more than doubled to US$ 35,548 million. This surge represents the primary driver of the increased solvency risk observed in the latter half of the period.
- Recent Solvency Stabilization
- A marginal improvement in solvency is noted between 2020 and 2021. Total debt decreased slightly to US$ 34,679 million, while total capital continued to expand to US$ 38,566 million. Consequently, the debt to capital ratio declined from 0.96 to 0.90, suggesting a slight reduction in leverage following the peak observed in 2020.
AI Ask an analyst for more
Debt to Assets
Delta Air Lines Inc., debt to assets 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) | ||||||
| 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) | |
| Total debt | 26,920) | 29,157) | 11,160) | 9,771) | 8,834) | |
| Total assets | 72,459) | 71,996) | 64,532) | 60,266) | 53,292) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.37 | 0.40 | 0.17 | 0.16 | 0.17 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| FedEx Corp. | 0.25 | — | — | — | — | |
| Uber Technologies Inc. | 0.25 | — | — | — | — | |
| Union Pacific Corp. | 0.47 | — | — | — | — | |
| United Airlines Holdings Inc. | 0.52 | — | — | — | — | |
| United Parcel Service Inc. | 0.32 | — | — | — | — | |
| Debt to Assets, Sector | ||||||
| Transportation | 0.36 | — | — | — | — | |
| Debt to Assets, Industry | ||||||
| Industrials | 0.30 | — | — | — | — | |
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 2021 Calculation
Debt to assets = Total debt ÷ Total assets
= 26,920 ÷ 72,459 = 0.37
2 Click competitor name to see calculations.
Between 2017 and 2021, the solvency profile experienced a period of relative stability followed by a significant increase in leverage. While assets grew consistently throughout the five-year period, the trajectory of total debt shifted dramatically in 2020, fundamentally altering the capital structure.
- Total Debt Trajectory
- From 2017 to 2019, total debt exhibited a moderate upward trend, rising from 8,834 million US$ to 11,160 million US$. A substantial surge occurred in 2020, where debt increased to 29,157 million US$, representing a growth of approximately 161% in a single year. By 2021, a slight reduction was observed, with total debt decreasing to 26,920 million US$.
- Total Asset Growth
- Total assets maintained a consistent growth pattern across the analyzed timeframe. Starting at 53,292 million US$ in 2017, assets grew steadily each year, reaching 72,459 million US$ by the end of 2021. This steady expansion indicates a continuous increase in the company's resource base, regardless of the volatility in debt levels.
- Debt to Assets Ratio Analysis
- The debt to assets ratio remained stable between 0.16 and 0.17 from 2017 through 2019, suggesting a conservative and consistent approach to leverage. However, the ratio spiked to 0.40 in 2020, reflecting that debt grew at a much faster rate than assets. A marginal improvement to 0.37 was recorded in 2021, indicating a slight reduction in the proportion of assets financed through debt, though the overall solvency position remains significantly more leveraged than in the pre-2020 period.
AI Ask an analyst for more
Debt to Assets (including Operating Lease Liability)
Delta Air Lines Inc., debt to assets (including operating lease liability) 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) | ||||||
| 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) | |
| Total debt | 26,920) | 29,157) | 11,160) | 9,771) | 8,834) | |
| Current maturities of operating leases | 703) | 678) | 801) | 955) | —) | |
| Noncurrent operating leases | 7,056) | 5,713) | 5,294) | 5,801) | —) | |
| Total debt (including operating lease liability) | 34,679) | 35,548) | 17,255) | 16,527) | 8,834) | |
| Total assets | 72,459) | 71,996) | 64,532) | 60,266) | 53,292) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.48 | 0.49 | 0.27 | 0.27 | 0.17 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| FedEx Corp. | 0.44 | — | — | — | — | |
| Uber Technologies Inc. | 0.29 | — | — | — | — | |
| Union Pacific Corp. | 0.50 | — | — | — | — | |
| United Airlines Holdings Inc. | 0.60 | — | — | — | — | |
| United Parcel Service Inc. | 0.37 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Transportation | 0.45 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Industrials | 0.34 | — | — | — | — | |
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 2021 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 34,679 ÷ 72,459 = 0.48
2 Click competitor name to see calculations.
The analysis of solvency ratios reveals a significant escalation in leverage from 2017 through 2021. Although the asset base expanded steadily throughout the period, the accumulation of total debt, including operating lease liabilities, occurred at a disproportionate rate, resulting in a substantial increase in the debt-to-assets ratio.
- Total Debt Accumulation
- Total debt grew from US$ 8,834 million in 2017 to US$ 34,679 million in 2021. The most pronounced increase occurred between December 31, 2019, and December 31, 2020, when debt more than doubled from US$ 17,255 million to US$ 35,548 million, indicating a period of rapid capital borrowing.
- Total Asset Growth
- A consistent upward trend is observed in total assets, which rose from US$ 53,292 million in 2017 to US$ 72,459 million in 2021. While the asset base grew steadily, the expansion was not sufficient to offset the rapid increase in liabilities during the latter half of the period.
- Debt to Assets Ratio Evolution
- The debt to assets ratio increased from 0.17 in 2017 to 0.48 in 2021. The ratio remained stable at 0.27 across 2018 and 2019 before spiking to 0.49 in 2020. This trajectory indicates a shift in the company's solvency profile, with nearly half of the total assets being financed through debt by the end of 2021.
AI Ask an analyst for more
Financial Leverage
Delta Air Lines Inc., financial leverage 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) | ||||||
| Total assets | 72,459) | 71,996) | 64,532) | 60,266) | 53,292) | |
| Stockholders’ equity | 3,887) | 1,534) | 15,358) | 13,687) | 13,910) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 18.64 | 46.93 | 4.20 | 4.40 | 3.83 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| FedEx Corp. | 3.43 | — | — | — | — | |
| Uber Technologies Inc. | 2.68 | — | — | — | — | |
| Union Pacific Corp. | 4.49 | — | — | — | — | |
| United Airlines Holdings Inc. | 13.56 | — | — | — | — | |
| United Parcel Service Inc. | 4.87 | — | — | — | — | |
| Financial Leverage, Sector | ||||||
| Transportation | 4.48 | — | — | — | — | |
| Financial Leverage, Industry | ||||||
| Industrials | 4.52 | — | — | — | — | |
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 2021 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= 72,459 ÷ 3,887 = 18.64
2 Click competitor name to see calculations.
Between 2017 and 2021, the organization experienced a consistent expansion of its total asset base accompanied by extreme volatility in stockholders' equity, which fundamentally altered its solvency profile and financial leverage.
- Asset Growth Trends
- A steady upward trajectory is observed in total assets, which increased from US$ 53,292 million in 2017 to US$ 72,459 million by December 31, 2021. This represents a continuous growth pattern over the five-year period, regardless of the fluctuations in equity.
- Equity Volatility
- Stockholders' equity remained stable between 2017 and 2019, ranging from US$ 13,687 million to US$ 15,358 million. A severe contraction occurred in 2020, with equity plummeting to US$ 1,534 million. A partial recovery was noted in 2021, with equity rising to US$ 3,887 million, though this figure remains significantly below the 2017-2019 baseline.
- Financial Leverage Analysis
- The financial leverage ratio exhibited relative stability from 2017 to 2019, fluctuating between 3.83 and 4.40. In 2020, the ratio spiked to 46.93, indicating a massive increase in the proportion of debt used to finance assets relative to equity. By the end of 2021, the ratio declined to 18.64; however, this level indicates a solvency structure that remains far more leveraged than the pre-2020 period.
The divergence between growing total assets and sharply declining equity in 2020 resulted in an unprecedented peak in financial leverage. While the 2021 figures suggest a trend toward stabilization, the company maintains a significantly higher leverage ratio than observed in the initial three years of the analyzed period.
AI Ask an analyst for more
Interest Coverage
Delta Air Lines Inc., interest coverage 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) | ||||||
| Net income (loss) | 280) | (12,385) | 4,767) | 3,935) | 3,577) | |
| Add: Income tax expense | 118) | (3,202) | 1,431) | 1,216) | 2,124) | |
| Add: Interest expense, net | 1,279) | 929) | 301) | 311) | 396) | |
| Earnings before interest and tax (EBIT) | 1,677) | (14,658) | 6,499) | 5,462) | 6,097) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 1.31 | -15.78 | 21.59 | 17.56 | 15.40 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| FedEx Corp. | 9.42 | — | — | — | — | |
| Uber Technologies Inc. | -1.20 | — | — | — | — | |
| Union Pacific Corp. | 8.33 | — | — | — | — | |
| United Airlines Holdings Inc. | -0.62 | — | — | — | — | |
| United Parcel Service Inc. | 24.91 | — | — | — | — | |
| Interest Coverage, Sector | ||||||
| Transportation | 6.98 | — | — | — | — | |
| Interest Coverage, Industry | ||||||
| Industrials | 5.14 | — | — | — | — | |
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 2021 Calculation
Interest coverage = EBIT ÷ Interest expense
= 1,677 ÷ 1,279 = 1.31
2 Click competitor name to see calculations.
The solvency profile from 2017 to 2021 exhibits a trajectory of initial strength, a severe contraction, and a subsequent partial recovery. The period is marked by a significant shift in the capacity to service debt, primarily driven by extreme volatility in operating earnings and a substantial increase in net interest obligations toward the end of the period.
- Pre-Pandemic Solvency Trend (2017-2019)
- A period of strengthening solvency is observed between 2017 and 2019. Earnings before interest and tax (EBIT) remained robust, peaking at 6,499 million US dollars in 2019. Simultaneously, net interest expenses decreased from 396 million US dollars to 301 million US dollars. This combination resulted in a steadily increasing interest coverage ratio, which rose from 15.40 to 21.59, indicating a high margin of safety for debt servicing.
- Fiscal Crisis and Solvency Collapse (2020)
- A critical decline in solvency occurred in 2020, characterized by a reversal of EBIT to a loss of 14,658 million US dollars. During the same period, net interest expenses more than tripled to 929 million US dollars. Consequently, the interest coverage ratio fell to -15.78, reflecting an inability to cover interest obligations through operating profits.
- Recovery Phase and Increased Debt Burden (2021)
- Operating profitability returned to positive territory in 2021 with an EBIT of 1,677 million US dollars. However, the cost of debt servicing continued to rise, reaching a five-year high of 1,279 million US dollars. While the interest coverage ratio recovered to a positive 1.31, this level remains significantly lower than pre-2020 benchmarks, indicating a tighter solvency position and a higher reliance on cash reserves or additional financing to meet interest commitments.
AI Ask an analyst for more
Fixed Charge Coverage
Delta Air Lines Inc., fixed charge coverage 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) | ||||||
| Net income (loss) | 280) | (12,385) | 4,767) | 3,935) | 3,577) | |
| Add: Income tax expense | 118) | (3,202) | 1,431) | 1,216) | 2,124) | |
| Add: Interest expense, net | 1,279) | 929) | 301) | 311) | 396) | |
| Earnings before interest and tax (EBIT) | 1,677) | (14,658) | 6,499) | 5,462) | 6,097) | |
| Add: Operating lease cost | 863) | 1,019) | 1,013) | 994) | 1,300) | |
| Earnings before fixed charges and tax | 2,540) | (13,639) | 7,512) | 6,456) | 7,397) | |
| Interest expense, net | 1,279) | 929) | 301) | 311) | 396) | |
| Operating lease cost | 863) | 1,019) | 1,013) | 994) | 1,300) | |
| Fixed charges | 2,142) | 1,948) | 1,314) | 1,305) | 1,696) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 1.19 | -7.00 | 5.72 | 4.95 | 4.36 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| FedEx Corp. | 2.83 | — | — | — | — | |
| Uber Technologies Inc. | -0.36 | — | — | — | — | |
| Union Pacific Corp. | 6.81 | — | — | — | — | |
| United Airlines Holdings Inc. | -0.01 | — | — | — | — | |
| United Parcel Service Inc. | 12.66 | — | — | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Transportation | 3.86 | — | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Industrials | 3.44 | — | — | — | — | |
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 2021 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 2,540 ÷ 2,142 = 1.19
2 Click competitor name to see calculations.
An analysis of the fixed charge coverage reveals a period of strengthening solvency followed by a severe contraction and a subsequent partial recovery. Between 2017 and 2019, the capacity to meet fixed obligations improved steadily. However, a drastic reversal occurred in 2020, leading to a negative coverage ratio, followed by a return to positive but constrained levels in 2021.
- Pre-Crisis Solvency (2017-2019)
- The fixed charge coverage ratio experienced a consistent upward trend, increasing from 4.36 in 2017 to 5.72 in 2019. This improvement was supported by earnings before fixed charges and tax reaching $7,512 million in 2019, while fixed charges decreased from $1,696 million in 2017 to $1,314 million in 2019.
- Fiscal Impact of 2020
- A critical decline is observed in 2020, where earnings before fixed charges and tax plummeted to negative $13,639 million. During this period, fixed charges increased to $1,948 million, resulting in a negative coverage ratio of -7.00, indicating an inability to cover fixed obligations from operating earnings.
- Recovery Phase (2021)
- By 2021, the coverage ratio returned to a positive value of 1.19, reflecting a return to profitability with earnings before fixed charges and tax at $2,540 million. Despite this recovery, fixed charges continued to climb to $2,142 million, leaving the company with a significantly thinner solvency margin compared to the pre-2020 period.
AI Ask an analyst for more