Income Statement: United Airlines
For this paper, I will be referencing the United Airlines 2020 income statement since this is the most recently completed year. This will also show intriguing results since the airlines are one of the industries that took the heaviest blow during the pandemic. Before even looking at their income statement it is reasonable to conclude that they were at a net loss for the operations of that year.
Their revenue for 2020 is fifteen billion dollars. At first glance, this may appear to be positive for American airlines. Although in 2019 revenue was forty-three billion. Also, the cost of Revenue was twenty billion dollars which put them in a five billion dollar deficit. If something does not change in 2021 then the company will shortly be run into the ground. Their gross profit is negative which can never sustain a business for long. If they were not so well established and had government bailouts then they would have become bankrupt. The operating cost tack on is another four hundred million deficit. Net Non-Operating Interest and other Income Expenses raise the total deficit to eight billion dollars before tax. The EBITDA is not listed for that year or the ones before. It does have an EBIT listed though. What EBITDA has that EBIT does not is that it accounts for debt financing. American Airlines could have not had any debt until running up a deficit in 2020 because there is an EBITDA listed for 2021 when they would start paying off their loans. Their EBIT listed for 2020 is just short of eight billion dollars. This is a significant loss for the company.
It is safe to say that this year was not good for American Airlines. Although looking at other year’s income truly shows how much its impact had. The previous year had a twelve and a half billion gross profit instead of a five billion deficit. It also had nearly four billion after operating costs pretax. There is a stark difference. The pandemic is to blame and is an unforeseen obstacle, but was enough to sink multiple companies. By still standing American Airlines is doing better than most still.
