Unlimited First Class Flights For Life — How American Airlines Made The Most Expensive Mistake In Aviation History
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November 14, 2019 - by James Asquith for forbes,com
Lots of companies make mistakes. Some mistakes just turn out to be more costly than others.
Take Blockbuster Video for example who turned down the chance to buy Netflix for $50 million in 2000. At the time the price was seen as far too high for Blockbuster to pay. Hindsight is a wonderful thing of course, and Netflix is now worth $145 billion, whilst Blockbuster is left with just one token store globally.
Or of course Yahoo, who failed to buy Google for $1 billion in 2001 (now worth over $800 billion), and doubling down on refusing to themselves being acquired by Microsoft in 2008 for over $44 billion—eventually Yahoo was sold to Verizon for a little over $4 billion.
Scraping for nickels to keep their fleet flying, American's former President Robert Crandall wanted to cut costs dramatically and rebuild the airline from the ground up.
With high interest rates at the time, the airline came up with an alternative way to try and raise quick cash—by offering unlimited First Class tickets for life, for $250,000 each....