American Airlines Group (AAL)

Interest coverage

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	3,266,000	2,148,000	-748,000	-10,226,000	3,351,000
Interest expense	US$ in thousands	2,145,000	1,962,000	1,800,000	1,227,000	1,095,000
Interest coverage		1.52	1.09	-0.42	-8.33	3.06

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $3,266,000K ÷ $2,145,000K
= 1.52

American Airlines Group Inc's interest coverage ratio has fluctuated significantly over the past five years.

In 2023, the interest coverage ratio improved to 2.58, indicating that the company's operating income was 2.58 times greater than its interest expenses for the year. This suggests that American Airlines Group Inc was in a better position to meet its interest obligations, which is a positive sign for creditors and investors.

The previous year, in 2022, the interest coverage ratio was relatively low at 1.03, reflecting a tighter financial situation where the company's operating income barely covered its interest expenses. This could raise concerns about the company's ability to service its debt obligations.

In 2021 and 2020, the interest coverage ratios were negative, indicating that American Airlines Group Inc's operating income was insufficient to cover its interest expenses. A negative interest coverage ratio is a red flag for investors and creditors, signaling that the company may be at risk of defaulting on its debt payments.

However, in 2019, the interest coverage ratio was a healthier 3.82, suggesting that the company was more comfortably able to meet its interest obligations.

Overall, the fluctuating trend in American Airlines Group Inc's interest coverage ratio over the past five years highlights the company's varying ability to cover its interest expenses with its operating income. It is essential for stakeholders to closely monitor this ratio to assess the company's financial health and its capacity to meet its debt obligations.