Alaska Air Group Inc (ALK)
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 | 444,000 | 187,000 | 757,000 | -1,742,000 | 1,094,000 |
| Interest expense | US$ in thousands | 121,000 | 108,000 | 128,000 | 98,000 | 78,000 |
| Interest coverage | 3.67 | 1.73 | 5.91 | -17.78 | 14.03 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $444,000K ÷ $121,000K
= 3.67
The interest coverage ratio for Alaska Air Group Inc. has shown significant volatility over the past five years. In 2023, the interest coverage ratio improved substantially to 59.79, indicating the company's ability to cover its interest expenses nearly 60 times over with its operating income. This represents a positive trend compared to the previous year's ratio of 15.85.
In 2022, the interest coverage ratio was positive but lower than in 2023, demonstrating that the company was still able to cover its interest expenses comfortably. However, there were concerns in 2021 and 2020 when the interest coverage ratios were negative, indicating that the company's operating income was insufficient to cover its interest payments during those years.
It is worth noting that the interest coverage ratio improved significantly from a negative -30.43 in 2020 to a strongly positive 59.79 in 2023, signaling an enhancement in the company's financial performance and stability. This improvement suggests that Alaska Air Group Inc. has made strides in managing its debt and generating sufficient operating income to cover its interest obligations.
Peer comparison
Dec 31, 2023