Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Delta Air Lines Inc., FCFF 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).
- Operating Activities Cash Flow
- The net cash provided by operating activities exhibited a generally increasing trend from 2017 to 2019. Specifically, it rose from $5,148 million in 2017 to $7,014 million in 2018 and further to $8,425 million in 2019. However, in 2020, there was a substantial decline, resulting in a negative cash flow of $3,793 million, indicating significant operational challenges or disruptions during that year. This decline was partially recovered in 2021, with net cash provided by operating activities returning to a positive $3,264 million, though still well below the pre-2020 levels.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm reflected a similar pattern to operating cash flow but with more pronounced fluctuations. From 2017 to 2019, FCFF steadily increased from $1,251 million to $3,209 million, indicating growing cash available after capital expenditures. However, in 2020, FCFF turned sharply negative, declining to -$5,468 million, suggesting heavy outflows possibly due to increased investments or reduced operational cash inflows. In 2021, FCFF marginally improved to $25 million, reflecting some recovery but still illustrating a challenging financial position relative to earlier years.
Interest Paid, Net of Tax
Delta Air Lines Inc., interest paid, net of tax calculation
US$ 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).
2 2021 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= 1,506 × 29.80% = 449
- Effective Income Tax Rate (EITR)
- The effective income tax rate exhibited a declining trend from 2017 through 2020, decreasing from 34.6% in 2017 to 20.5% in 2020. This represents a substantial reduction over the four-year period, reflecting lower tax expenses relative to income. However, in 2021, the effective tax rate increased sharply to 29.8%, reversing part of the previous downward trend.
- Cash Paid for Interest, Net of Tax
- Cash paid for interest, net of tax, showed a consistent and pronounced increasing pattern throughout the entire period. Starting at $255 million in 2017, the figure rose modestly to $285 million in 2018, then increased more significantly to $370 million in 2019. A notable jump occurred in 2020, with cash interest paid nearly doubling to $605 million, followed by a further substantial increase to $1,057 million in 2021, indicating a growing cost of debt financing or higher interest obligations over time.
Enterprise Value to FCFF Ratio, Current
Delta Air Lines Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 34,645) |
| Free cash flow to the firm (FCFF) | 25) |
| Valuation Ratio | |
| EV/FCFF | 1,374.13 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| FedEx Corp. | 18.64 |
| Uber Technologies Inc. | 26.94 |
| Union Pacific Corp. | 24.91 |
| United Airlines Holdings Inc. | 8.34 |
| United Parcel Service Inc. | 14.41 |
| EV/FCFF, Sector | |
| Transportation | 24.92 |
| EV/FCFF, Industry | |
| Industrials | 37.35 |
Based on: 10-K (reporting date: 2021-12-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
Delta Air Lines Inc., historical EV/FCFF 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) | ||||||
| Enterprise value (EV)1 | 42,689) | 42,686) | 46,127) | 42,684) | 43,987) | |
| Free cash flow to the firm (FCFF)2 | 25) | (5,468) | 3,209) | 2,038) | 1,251) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 1,693.21 | — | 14.37 | 20.94 | 35.16 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| FedEx Corp. | 18.72 | — | 87.04 | — | — | |
| Uber Technologies Inc. | — | — | — | — | — | |
| Union Pacific Corp. | 26.42 | 25.20 | — | — | — | |
| United Airlines Holdings Inc. | 79.24 | — | — | — | — | |
| United Parcel Service Inc. | 16.95 | 28.23 | — | — | — | |
| EV/FCFF, Sector | ||||||
| Transportation | 24.81 | 184.17 | — | — | — | |
| EV/FCFF, Industry | ||||||
| Industrials | 28.80 | 189.49 | — | — | — | |
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).
3 2021 Calculation
EV/FCFF = EV ÷ FCFF
= 42,689 ÷ 25 = 1,693.21
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value remained relatively stable over the five-year period, with minor fluctuations. It started at approximately $43.99 billion in 2017, experienced a slight decline in 2018 to around $42.68 billion, then increased in 2019 to about $46.13 billion. In 2020 and 2021, the value stabilized again near $42.69 billion. Overall, the range suggests moderate volatility without a clear upward or downward trend.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow demonstrated significant variability over the period. It increased steadily from $1.25 billion in 2017 to $3.21 billion in 2019, indicating improving cash generation capabilities. However, 2020 saw a sharp reversal, with FCFF dropping to a negative $5.47 billion, reflecting a substantial cash outflow likely due to extraordinary circumstances. By 2021, FCFF showed a recovery to a marginally positive $25 million, signaling a partial stabilization albeit at a much lower level compared to pre-2020 figures.
- Enterprise Value to Free Cash Flow to the Firm Ratio (EV/FCFF)
- The EV/FCFF ratio declined notably from 35.16 in 2017 to 14.37 in 2019, suggesting that the company's valuation was becoming more attractive relative to its free cash flow generation, consistent with improving FCFF levels. The ratio was undefined in 2020 due to the negative FCFF. In 2021, the ratio surged dramatically to 1693.21, reflecting a near-zero FCFF that inflated the ratio substantially. This extreme fluctuation indicates significant challenges in free cash flow generation affecting valuation metrics.