Don,
"how can you produce profit?"
Its called Marginal Cost Pricing, which in simple terms means that as long as the ticket price covers the incremental cost of carrying the extra passenger and his bags,(some additional fuel, catering, admin cost of ticketing/reservation etc), then its worth taking the extra pax at that apparently very low fare because any revenue above these incremental costs is a contribution to overall revenue (not technically profit, because that comes after a further contribution is made to overheads or fixed costs).
The danger comes when the airline is selling too many tickets based on this principle. While its possible, its highly unlikely there would be many seats available at these very low fares, and its all based on the principle that once the aircraft door is closed for departure, any empty seat is a wasted revenue earning opportunity - as I'm sure you know. Last minute sale of upgrades at check in at knock down rates is based on the same idea. Airline Revenue Optimization/Capacity control departments assess how many seats they can release at these low fares without diluting overall revenue and its become a hugely complex function.
Apologies if I'm stating the obvious or teaching granny to suck eggs......
7B