The issue is not simply whether the airline can necessarily make a profit. For many it was an issue of prestige, before rationalism took over. First class was ALL that was available 50 years ago but increasingly the market demanded a cheaper alternative and as aircraft became larger and more reliable, the Y class product provided the bulk of revenue.
For many of the more frequent fliers, Y did not provide the comfort for the longer sectors, yet the first class fares were too expensive. Enter a "mid class" (Qantas was the first) at a premium fare. This was also to remove the annoyance of (a) leisure passengers on very cheap APEX fares flying alongside full fare economy business people, and (b) identify and upgrade the regular business passenger and provide an environment where they could work wothout the distraction of other passengers.
It has quickly become apparent that many city pairs cannot support a first class product at the prices charged, hence the growth of J class. And of course the J class product has been improved substantially as airlines compete for that premium yield passenger.
Now we see airlines configuring their aircraft according to the routes that they fly, deleting the First product and substituting the improved J. KLM, Ansett International are just two examples. Others, such as Air NZ and Qantas still have a first product, but only on selected routes. For many years, first class was not profitable at Qantas, given the low load factors in the front of the aircraft. For most airlines, first is still a marginal product, but is a matter of prestige. J is far more profitable, hence the growth in improving the Business class amenities. The movement to a "4th" cabin is purely a reflection of again separating the full fare passenger from the discount passenger, because the frequent fliers are demanding increased service levels, but at a cheaper fare. (A reflection of the glabal economy and need to cut the costs of travel). Four classes may prove difficult to manage in terms of fare level segregation, but while airlines offer an good business class product, that is all I need.