$200m positive from operations is easily wiped out by something like a virus.. but overall substantially negative cash flows in the last two non virus years.
So there are a couple of issues here. Firstly - what I was supposed to say was 'free cash flow', not 'positive cash flow'. My error. Second - looking at half-year results is 'half the picture'. It is a 'pulse check'. It's not an effective assessment. A lot can happen between halves that can drive performance up or down. You need to look at the full-year outcome. Thirdly - you need to consider both 'cash flow' and 'free cash flow'. They're different. Free cash flow is one of the most important measure of economic performance. It is a measure of the amount of cash flows that are truly unencumbered by the operation of the business. It is the purest measure of cash and forms the basis for valuation by removing the distorting effects of noncash charges, accounts for changes in working capital and acknowledges the capital expenditure for growth and have been avoided so far. It isolates the cash that is truly free to be distributed or used however VA sees fit.
For FY19 VA delivered 'positive free cash flow' of $53.9m. They raised the cash balance by $324m mostly through refinancing. And whilst it is also important to have 'positive cash flow' (not to be confused with free cash flow), you can see there is some large capital spending ($486.9m) in FY19 (and a lot of debt taken on under 'borrowings').
And we know in 1H20 they raised ~$1b via unsecured notes to fund a US$400m Bond that had expired (using debt to pay for debt) and to pay for Velocity ($700m). And they have dipped into cash reserves since that now reflects a reduction of $1.7b to $1.1b ($632m).
Don't get me wrong. Their debt levels are outrageous. Their leverage ratio is outrageous. They are dancing a debt tightrope and with cash flow reducing - they're ability to sustain will become challenged without spending all the reserves, selling off stuff, or raising more debt in the market (they can still do more of this - it just comes at a much higher price). And yes - their current liabilities are $1.5b greater than their assets. So if they were to collapse - there isn't going to be enough money to pay everyone (at this stage).
I see they have a $350m usd bond due October next year.
They'll likely refinance that or use a combination of cash and finance. All depends on the environment at that time.
And on B772's comments regarding their ratings - these are still opinions and need to be considered as that. Yes it does have an impact, but Qantas has been rated as 'junk' many times in the past.
Fingers crossed VA can continue to service debt for now. They may need to start a fire sale via Pickels Auctions... I see the airforce is selling some PC-9's there at the moment...