American Airlines Group (AAL)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.48 | 0.06 | 0.54 | 0.56 | 0.52 |
| Debt-to-capital ratio | 1.15 | — | 1.20 | 1.24 | 1.27 |
| Debt-to-equity ratio | — | — | — | — | — |
| Financial leverage ratio | — | — | — | — | — |
American Airlines Group's solvency ratios provide insight into the company's ability to meet its long-term financial obligations.
1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets financed by debt. The trend for American Airlines Group's debt-to-assets ratio shows a slight increase from 0.52 in 2020 to 0.56 in 2021, before decreasing to 0.54 in 2022 and experiencing a significant drop to 0.06 in 2023 before rising again to 0.48 in 2024. The decrease in 2023 could indicate a reduction in debt levels relative to assets, but the subsequent increase in 2024 suggests a return to higher debt levels.
2. Debt-to-capital ratio: This ratio indicates the percentage of the company's capital that is financed by debt. American Airlines Group's debt-to-capital ratio remained relatively stable, declining from 1.27 in 2020 to 1.24 in 2021, further to 1.20 in 2022, and then improving to 1.15 in 2024. It is worth noting that there is missing data for 2023, which limits the analysis for that year.
3. Debt-to-equity ratio: The absence of data for the debt-to-equity ratio for all years indicates that we do not have information to assess the proportion of American Airlines Group's financing that comes from debt relative to equity.
4. Financial leverage ratio: Similarly, the lack of data for the financial leverage ratio for all years means we cannot evaluate the company's financial leverage and the impact of debt on its capital structure.
In summary, the trend in American Airlines Group's solvency ratios suggests fluctuations in the company's debt levels relative to assets and capital over the years. However, the absence of data for certain ratios limits a comprehensive assessment of the company's overall solvency position.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 1.35 | 1.52 | 1.09 | -0.42 | -8.33 |
The interest coverage ratio of American Airlines Group has shown a declining trend over the analyzed period, starting at a concerning -8.33 on December 31, 2020, indicating potential difficulty in meeting interest obligations with operating income. However, there has been a slight improvement since then, with the ratio increasing to -0.42 on December 31, 2021, though it still remains below 1, indicating a continued challenge in covering interest expenses.
There has been a more significant improvement in the following years, with the interest coverage ratio rising to 1.09 on December 31, 2022, 1.52 on December 31, 2023, and 1.35 on December 31, 2024. While these improvements suggest a better ability to meet interest payments from operating income, the ratio hovering around 1 still indicates that American Airlines Group may have limited margin of safety to cover interest expenses from its earnings.
Overall, American Airlines Group has shown some progress in enhancing its interest coverage ratio in recent years, but investors and lenders may continue to monitor this ratio closely to ensure the company's ability to service its debt obligations remains sustainable.