A recurring story over the past four decades of Icelandic budget airlines
Iceland’s entrepreneurs: “If we sell enough tickets at below cost, we will magically turn a profit!”
Iceland’s “sophisticated” investor class: “That makes sense. Here’s a ton of money!”
@baldur It's not just Iceland.
@baldur They make simple mistakes too, like very short hedges on fuel, or no hedge at all, and so a modest increase bankrupts them as it completely trashes their Op-Ex.
@sullybiker Yeah, the "lol, no why would you hedge on fuel?" thing that keeps happening with budget airlines was so surprising to me.
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@baldur They make simple mistakes too, like very short hedges on fuel, or no hedge at all, and so a modest increase bankrupts them as it completely trashes their Op-Ex.