Stock版 - Delta got burnt by hedging |
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W***n
发帖数: 11530 | 1 Delta loses $450 million bet on fuel prices
by Chris Isidore @CNNMoney
July 5, 2016: 6:13 PM ET
Delta Air Lines is taking a $450 million loss because jet fuel prices didn't
jump as much as the airline bet they would.
The Atlanta-based airline had locked in fuel purchases, in a contract known
as a hedge, at levels above the current market value, betting that jet fuel
prices prices would climb. And they did indeed rise. But they didn't go
nearly as high as Delta had anticipated, which made that hedge a loser. So
Delta pulled out of the fuel contracts, which cost the airline nearly half a
billion dollars.
But it's not all bad news for Delta. Fuel prices are up 60% from their
January lows, but they're down 20% from a year ago. So, even with the cost
of canceling its fuel contract, Delta will save money on fuel, which is its
second largest expense, in the second quarter.
Delta took an even bigger hit on hedges last year -- $2.3 billion according
to company filings -- as fuel prices fell throughout the year. It lost
another $274 million on hedges in the first three months of this year.
Delta is not the only airline to take a hit on fuel hedges. United
Continental (UAL) lost $604 million last year. Southwest (LUV) said in a
March SEC filing that it could lose more than $1 billion on its hedges in
the coming years, after losing $254 million in 2015.P
Most carriers buy hedges to protect them from unexpected price spikes.
American Airlines (AAL) is the only one out of the nation's four biggest
carriers that doesn't do fuel hedges. Its executives are on the record as
saying that they're a bad bet. |
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