AMR Has Positive Cash Flow in May

[lownslow]

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On 7/1/2003 10:00:16 AM lurker wrote:

Actually it''s cash flow, rather than profits, that are meaningful.

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This is true only in a short-term vision of the company, though - when your fuel supplier demands payment, it is important to have the cash to pay the bill, so being cash positive can make a company on the brink of financial disaster *slightly* more solvent. However, in a longer-term vision of the company, you *must* be profitable. At this point, AA could be unprofitable for years to come, and as long as they remain cash positive, they''ll stay in business. However, such a state does not provide the resources to pay for the replacement of equipment - so your fleet and other equipment will simply get older and smaller, as the company won''t be able to replace aging aircraft. So being cash positive may give them a breather, but until the company is profitable, its long term future is still in doubt.

 

[kirkpatrick]

At any rate, the first positive cash flow in a long time is a good sign things are turning around.

MK

 

[lurker]

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This is true only in a short-term vision of the company, though - when your fuel supplier demands payment, it is important to have the cash to pay the bill, so being cash positive can make a company on the brink of financial disaster *slightly* more solvent. However, in a longer-term vision of the company, you *must* be profitable. At this point, AA could be unprofitable for years to come, and as long as they remain cash positive, they''ll stay in business. However, such a state does not provide the resources to pay for the replacement of equipment - so your fleet and other equipment will simply get older and smaller, as the company won''t be able to replace aging aircraft. So being cash positive may give them a breather, but until the company is profitable, its long term future is still in doubt.

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We''re saying close to the same thing. The income statement, cash flow statement and balance sheet are all tied together. As an investor, you are buying a share of future cash flows, not profits (which include non-cash items and judgement calls), but they are directly linked - hard to continue cash positive if you are earnings negative.

 

[AAmech]

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On 7/1/2003 12:37:47 PM lownslow wrote:

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On 7/1/2003 10:00:16 AM lurker wrote:

Actually it''s cash flow, rather than profits, that are meaningful.

----------------​

This is true only in a short-term vision of the company, though - when your fuel supplier demands payment, it is important to have the cash to pay the bill, so being cash positive can make a company on the brink of financial disaster *slightly* more solvent. However, in a longer-term vision of the company, you *must* be profitable. At this point, AA could be unprofitable for years to come, and as long as they remain cash positive, they''ll stay in business. However, such a state does not provide the resources to pay for the replacement of equipment - so your fleet and other equipment will simply get older and smaller, as the company won''t be able to replace aging aircraft. So being cash positive may give them a breather, but until the company is profitable, its long term future is still in doubt.

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Hey stop raining on my parade!!! I''m really enjoying this little moment in the sun! Bringing us down with things like, Reality, and Facts!!! How Dare You!!!