"The easiest way for the public to understand LCC's is the level of service that you get equates to the fare paid. If you pay $40 for your ticket, dont expect the LCC to pay $140 to accomodate you if the aircraft breaks down."
The problem often is that the person who paid $140 for a fare on the same LCC flight is treated no better than the person who paid $40. Both tickets would be in the non-refundable, non-etc category.
In this case the airline sold the $40 fare as a discounted std fare with the same T&C as its regular baseline tickets. This implies the fare is the same as the std fare, except for price (if not the ticket isn't discounted but simply a new lower class of ticket with different T&C). This is different to selling two fare types one which includes good support and costs more and the other which doesn't.
While an airline can not predict which flights will be cancelled, delayed etc it CAN predict that some will be cancelled etc and should plan for that.
It is normal for firms dealing in large volumes to expect to loose money on a small percentage of sales. For example when my vacuum cleaner broke down the retailer and importer both incurred warranty related costs which meant they lost money on the sale. A well run firm would include some allowance in each ticket/item price to cover them for such warranty type expenses.
Also when flights are cancelled, and passengers rescheduled onto later flights the airline will often save some money on fuel and landing charges.