So what was the problem with AA, did they expend all the money from forward bookings. The news said they had 100,000 tickets booked for the next few months. Seems like pretty healthy loads.
Dunno about airlines, but this is becoming a problem for smaller players in the entertainment industry. Online sales mean you get the money at the time of sale, not at the actual event. This means that you can't count on a big wad of cash when your performance is on, because it actually came in (and often got spent) in dribs and drabs leading up to it. Some entertainment types are having a hard time getting used to this, and not relying on a big wad of cash come show night to cover the show costs; particularly the unexpected ones like when someone drops a road case on something expensive, falls out of the lighting grid or gets sued for breach of copyright / decency laws.
Of course budgeting and basic common sense would dictate that you put that money aside for the costs you'll incur while running the event or operating the flight, but there have been enough showbiz and airline train wrecks recently to show that this doesn't always happen.
These guys were spending money like drunken sailors (Indy sponsorships FFS? Lavish parties to Bali? Even Virgin have trimmed the Drunken Hangar Orgy budget in recent times, and they were the queens of the massive party
). After that big display of apparent opulence, they were brought down by fuel bills.
They follow a number of 'airline gone broke, everyone out of pocket' incidents and I don't blame the fuel companies for operating on a strictly cash basis. Along with a number of other service providers, they have been burned several times before.
Both industries attract manic attention seekers who want to see their name in lights. Both industries are also basically unprofitable because their operating costs are very close to their possible profit. Both industries are highly competitive and contain a number of companies who are either government sponsored or savvy old players who have been around a loong, loong time. They don't waste money whooping it up in Bali or swanking around at Indy. They spend it on the vital stuff like fuel and landing fees.
I believe Optus budgeted for 10 years of losses in their start up business plan.
Maybe that's why Optus are still trading.
Best of luck EWL. You must be having a pretty rough time at the moment!
