T - airline businesses are very good cash cows. Nothing surprising there. Profitability on the other hand......
Lenders don’t lend, lessors don’t lease and shareholders don’t invest on free cash flow. With $1.9 Billion in sustained losses, VA is a poor story.
Actually Arthur - FCF is a very useful measure of a companies
true profitability and is used by investors. It is hard to manipulate and tells a better story. It is about the 'here and now' versus the P+L which smoothes out cash over time and excludes non-cash expenses. And because it accounts for changes in working capital, it can provide insights into the value of the business and the health of its fundamental trends. It is a better metric to determine the short-term and long-term outlook of the business. Of course - it isn't perfect in every sense, and there are many other measures to consider like ROA, ROE, ROS, GPM, EBIT Margin etc.
What it does not show is the potential future costs and for poor prior decisions i.e. non-cash expense.
But I come back to your original post where my response was specifically targeted towards, and that is VA is not burning through cash. They have free cash remaining to do anything they like with e.g. share buyback, dividends, pay down debt, reinvest into product etc.
I don't have the documents to view, but I can't see that Ansett would have been cash flow positive otherwise it would have been able to continue trading. I am sure it ran out of cash.