American Airlines Group (AAL)
Solvency ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.48 | 0.49 | 0.49 | 0.49 | 0.06 | 0.06 | 0.51 | 0.52 | 0.54 | 0.54 | 0.53 | 0.55 | 0.56 | 0.47 | 0.54 | 0.57 | 0.52 | 0.51 | 0.42 | 0.40 |
| Debt-to-capital ratio | 1.15 | 1.18 | 1.18 | 1.21 | — | — | 1.15 | 1.20 | 1.20 | 1.28 | 1.30 | 1.32 | 1.24 | 1.30 | 1.24 | 1.25 | 1.27 | 1.21 | 1.13 | 1.13 |
| Debt-to-equity ratio | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Financial leverage ratio | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
American Airlines Group's solvency ratios reflect its ability to meet its long-term financial obligations.
The Debt-to-assets ratio has been fluctuating over the periods provided, peaking at 0.57 in March 31, 2021 and then gradually declining to 0.48 by December 31, 2024. This ratio indicates that American Airlines Group's assets are financed by debt to a significant extent.
The Debt-to-capital ratio also shows variability, reaching a high of 1.32 on March 31, 2022, and decreasing to 1.15 by June 30, 2023 before slightly rising again. This ratio signifies the proportion of the company's capital that is funded by debt, with levels above 1 indicating that debt financing exceeds equity financing.
The Debt-to-equity ratio and Financial leverage ratio data is unavailable for analysis, which limits our ability to assess the company's reliance on debt in relation to equity and its overall financial leverage.
Overall, American Airlines Group's solvency ratios suggest a significant reliance on debt to support its operations and growth, with some fluctuations in the levels of debt relative to assets and capital over the periods examined.
Coverage ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 1.39 | 1.06 | 0.92 | 1.33 | 1.52 | 1.97 | 2.63 | 2.12 | 1.09 | -0.06 | -0.32 | -0.62 | -0.42 | -1.44 | -3.75 | -6.56 | -8.33 | -6.23 | -3.17 | 0.19 |
The interest coverage ratio measures a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). A ratio below 1 indicates that the company is not generating enough earnings to cover its interest expenses, which can be concerning to lenders and investors.
Looking at the interest coverage data provided for American Airlines Group, we can see that the ratio was extremely low, reaching negative values in the range of -3.17 to -8.33 from June 2020 to December 2020. This suggests that during this period, American Airlines Group had significant challenges in generating enough earnings to cover its interest expenses.
However, there was a gradual improvement in the interest coverage ratio from December 2021 onwards, with the ratio moving into positive territory in December 2022 at a ratio of 1.09. The ratio continued to improve in the following quarters, reaching a ratio of 1.52 in December 2023.
While the trend shows improvement in the company's ability to cover its interest expenses with its earnings, it is important to monitor the ratio closely to ensure that American Airlines Group can sustain this positive performance and continue to meet its interest obligations in the future.