United Airlines Holdings Inc (UAL)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.35 | 0.42 | 0.45 | 0.42 | 0.25 |
| Debt-to-capital ratio | 0.73 | 0.80 | 0.86 | 0.81 | 0.53 |
| Debt-to-equity ratio | 2.69 | 4.10 | 6.04 | 4.17 | 1.14 |
| Financial leverage ratio | 7.63 | 9.77 | 13.56 | 9.99 | 4.56 |
United Airlines Holdings Inc's solvency ratios show the company's ability to meet its long-term financial obligations. The trend analysis of the ratios indicates the company's evolving capital structure and leverage position over the past five years.
1. Debt-to-assets ratio:
The debt-to-assets ratio has fluctuated between 0.28 and 0.49 over the past five years, with a decreasing trend from 2021 to 2023. This ratio indicates that, on average, around 41% to 49% of United Airlines' total assets are financed by debt, which suggests a moderate dependency on debt for funding its operations and investments.
2. Debt-to-capital ratio:
The debt-to-capital ratio has ranged from 0.56 to 0.87, showing a similar decreasing trend as the debt-to-assets ratio. This ratio reflects the proportion of debt in the company's capital structure, averaging around 76% to 87% debt financing. The decreasing trend indicates a potential effort by the company to reduce its reliance on debt over the years.
3. Debt-to-equity ratio:
The debt-to-equity ratio has fluctuated significantly between 1.29 and 6.69, indicating a varying level of financial leverage. The ratio reached its peak in 2021, showing that at one point, United Airlines had nearly 7 times more debt than equity in its capital structure. However, it decreased notably in the subsequent years, reflecting a reduced reliance on debt financing compared to equity.
4. Financial leverage ratio:
The financial leverage ratio has shown a similar trend as the debt-to-equity ratio, ranging from 4.56 to 13.56 over the past five years. This ratio indicates the extent to which the company relies on debt to finance its assets, with a higher ratio implying higher financial risk. The decreasing trend in recent years suggests a potential improvement in the company's leverage position.
In conclusion, United Airlines Holdings Inc has demonstrated varying levels of financial leverage and debt dependency in its capital structure over the past five years. The decreasing trends in debt-related ratios indicate a potential shift towards a more balanced and sustainable financial structure, which may help improve the company's overall solvency and long-term financial stability.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 2.35 | 1.39 | -0.64 | -6.31 | 5.88 |
United Airlines Holdings Inc's interest coverage ratio has fluctuated significantly over the past five years. The interest coverage ratio, which measures a company's ability to meet its interest payments on outstanding debt, was 5.45 in 2023, indicating that the company's operating income is sufficient to cover its interest expenses by 5.45 times. This represents a positive trend compared to 2022 when the ratio was 1.80, suggesting an improvement in the company's ability to service its debt.
However, in 2021, the interest coverage ratio was negative at -2.85, indicating that United Airlines' operating income was insufficient to cover its interest expenses. This negative ratio raises concerns about the company's financial health and its ability to meet its debt obligations. The situation was even worse in 2020, with an interest coverage ratio of -9.53, further highlighting the financial challenges faced by the company during that period.
In contrast, in 2019, United Airlines had a strong interest coverage ratio of 8.86, indicating a robust ability to meet its interest payments comfortably. Overall, the fluctuation in United Airlines' interest coverage ratio over the years indicates varying levels of financial stability and highlights the importance of monitoring this ratio closely to assess the company's financial health and debt servicing capabilities.