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Some Airlines Hedge Oil Prices Better Than Others

September 22, 2008 | Posted in: Airline News,Fuel Watch,United

We know Southwest is King of the Oil Hedgers, but some of those who came late to the party are learning.

According to a fine commentary by Mark Ashley, Delta expects to report a gain from its “fuel hedging activities” – but, United warned last week that it will “record noncash hedging losses of more than $500 million as it records the drop in the market value of its hedges”.

Translation: United hedged, then oil dropped.

This underscores how volatile airline financials are at the moment as the price of oil yo-yos from $147 down to close to $90 per barrel last week — and all the way back to near $110 today.

In other words, airlines are being forced to become day traders instead of carriers of travelers – and some are not very good or lucky at it….

Bottom Line: Don’t expect either fuel surcharges or fees to drop anytime soon – not in this wild environment.

 

2 Responses to “Some Airlines Hedge Oil Prices Better Than Others”

  1. Rhonda says:

    Rick, When are airlines supposed to let a passenger know if there are fuel surcharges on their flights? We got our tickets in July and the itinerary has changed 3 times since then. I would hate to come December and they have added a fuel surcharge to our ticket. What do we do when they keep changing our itinerary as well? Thanks.

  2. Rick Seaney says:

    Fuel Surhcarge is already in your ticket price and cannot be changed once you purchase your ticket

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