The fuel hedging story: from boom to bust in no time

Fuel hedging. Hard to understand and hard to get right – especially in the past year with prices as volatile as they have been.

This article from John Bowker at Reuters nicely sets out the current state of play on airline hedging.

It follows our very own Kerry Ezard’s article in the August issue of Airline Business that set out what airlines were doing when oil was at or around its peak of $140+ a barrel.

Since then many caught a cold, having hedged at over $100 a barrel when it was up in the $140 pirce range, only to see the price drop back well below $100.

Then there are the US carriers like Southwest and United that have had to account for losses in their fuel hedge contracts.

As ever when people are trying to second guess the market the potential for error is large. But who have thought fuel hedging would have become so critical and topical as it has been in the past months.

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