Regional Airlines is considering closing their club lounge at Sydney airport. Membership of the club lounge permits travelers to utilise the private lounge, meals and beverages, and health spa facilities. The CFO of the firm has recently compiled an analysis of the monthly profitability of the club.

Club membership revenue		$200,000
Variable costs (food, beverages, wages and other)		($135,000)
Fixed costs:
Staff salaries	($30,000)
Rent and insurance	($45,000)	($75,000)
Net loss		($10,000)

If the club is closed:

• The marketing manager has estimated that it would result in lost flight ticket sales as travelers switch to other airlines. The total contribution margin from these lost flight ticket sales is estimated to be $60,000 per month.
• The fixed staff salary costs that have been allocated to the club will still be incurred as these staff will be allocated to other duties. Other fixed costs will no longer be incurred.

Required:

Conduct a financial analysis to review whether the club should be closed or retained.