Airlines and hedging – now there is praise

Was watching CNN last week, and heard that at least one major US airline, South West, has been making significant use of hedging to manage their fuel costs. Many other US airlines have not been hedging significantly.

Another article mentioned that Lufthansa hedged around 83% of their fuel requirements for this year. Air France-KLM hedged 78%.

Ryanair has gone against a vow not to hedge. Silly thing to vow in the first place.

Typically, the masses aren’t saying what a bad decision it was to hedge given that the oil price has been on the up. Hopefully some will remember this next time airlines hedge and the price drops. It’s not about the outcome, it’s about risk management, focussing on controllable factors and being able to make decisions without the paralysis that huge macro swings can have.