jcw said:
Right it's a great strategy since DL has to burn 12% more fuel however good news it doesn't offset the 3% lower fuel cost so net net DL loses again
uh, DL burned LESS fuel in its consolidated operation than AA did - and generated more revenue as well.
SO, no, you are factually wrong.
but you obviously are driven solely by trying to find a come back than talking about the truth.
And, AANOTOK, the issue is solely about financial risk.
AA in its most recent annual report says that 40% of its revenue comes from sales outside of the US and 24% for US.
AA has NO currency hedging program.
IN contrast, DL has continued NW's currency hedging program esp. in the Japanese Yen. and that program has reduced DL's financial hit because of the yen devaluation.
DL also hedges against the Canadian dollar.
Because AA has no currency hedges, AA will take EVERY devaluation of currencies directly against its operating revenues. Their SEC filing says so.
Not hedging fuel is great and if that was the end of the story, AA might be in pretty good shape relative to the rest of the industry in the next few quarters.
However, fuel hedges can also benefit in falling oil prices. Perhaps you missed that DL and WN both posted fuel hedge gains and losses with the net of both being POSITIVE for the company.
It is not a given that fuel hedges will end up with a loss for a company in falling fuel situations.
Returning to currency, AA specifically noted in its earnings release that there is still more than $700 million of AA revenue which it cannot get out of Venezuela.
AA hasn't even publicly accounted for Argentina's devaluation other than in its revenue numbers.
The dramatic drop in AA's Latin RASM is directly related to currency devaluations in those countries.
A few people have heard about fuel hedging and thought AA was in great shape relative to its peers while being completely unaware of the huge currency risk that AA faces which is far larger than the fuel hedging losses that any carrier will take.
