Originally Posted by
Del Prado
and in case of volcanoes stopping flights for three weeks too?
”Hey airlines, we’re just going to increase our charges by 50% this year to save for a black swan event”, I can imagine how that would play with Messers O’Leary, Cruz, Etc.
Every company has a choice (actually, an obligation to its shareholders) to record, manage or mitigate risk (including risks that aren’t within their control). They can use reserves (undistributed profits, whatever term you’d choose to use) to fill any revenue/income/cash flow hole .... or, as generations of our elders would put it, to “save for a rainy day”. Generally, this is managed using reserves, borrowing that can be drawn down, and in having gearing at the right level (there are more choices but let’s keep it simple).
In terms of your concern for Mssrs O’Leary, Cruz et al, and as an IATA colleague and customer frequently points out to me, “the airlines pay for everything” ... so whether they pay before or afterwards, it’s always their money that’s used (!)