The Fuel Hedging Game

[FM2436]

Interesting article regarding the rising cost of aviation fuel and the do's and don'ts about fuel hedging. Mentions US Airways.

http://biz.yahoo.com/rf/040514/airlines_jetfuel_1.html

 

[insp89]

Interesting article regarding the rising cost of aviation fuel and the do's and don'ts about fuel hedging. Mentions US Airways.

http://biz.yahoo.com/rf/040514/airlines_jetfuel_1.html

Interesting Article, Thanks for posting it.. Southwest's CEO Parker stated in USA TODAY that if it were'nt for Fuel Hedging, Southwest would of lost money last quarter.

 

[Flying Titan]

I wouldn't want to make this decision right now for any airline. Last fall, I would have thought it was foolish to hedge - the country was on a war footing in Iraq, the administration pledged that prices would come down once the Iraqi situation settled and oil from there flowed freely onto the world markets - yet, looking back, it would have been a smart move.

Fast forward to today - highest oil prices in history. If you hedge now and the bottom falls out in time for the election (remember the Saudi pledge), you look like a fool as those who didn't hedge reap the rewards of waiting out the cycle. If you don't hedge and the prices go even higher, you can almost certainly bet that weaker carriers will have to make a visit to a federal judge, reorganize, and probably have to take some of these added costs out of their employees' hides since they can't seem to force ticket prices up and certainly can't tell OPEC to cut them a break. Not a pretty proposition.